I think a good excel spreadsheet is a totally underrated way of budgeting.
Now, I’m an accountant, so maybe I’m biased. I use excel literally all day long at work.
But using excel for budgeting can really streamline the process and enable you to create a budget that works for your specific situation.
I’m going to walk you through exactly how you can get started budgeting in excel. We’ll go through why excel is a great choice for your budget, and then I’ll walk you step-by-step through creating your first budget in excel.
Sound good? Let’s get started.
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How To Create A Budget In Excel
What Is a Budget, really?
Before we get too far, I want to make sure you understand the main goal of budgeting.
The purpose of a budget is just to create a plan for your money. That’s it.
It doesn’t have to be restrictive, you don’t have to cut out all your expenses when you have a budget.
It’s just a way to tell your money where to go so you know that all your bills are covered and you can put money toward your goals.
If you’ve never tried to create a budget before, I think this article on creating your first budget would be a good read for you.
Download Your Free Excel Budget Template
If you’ve never touched excel before, the idea of creating a budget spreadsheet from scratch is probably totally overwhelming.
To help you out, I created an excel budget template you can download and use for your own budget.
I created it based on the budget spreadsheet I use for myself. It’s totally editable in case you need to add anything, but is simple enough that a beginner can use it.
Go ahead and get that downloaded and ready!
We’re going to quickly talk through why I think excel is a great tool for budgeting and then we’ll get into the actual budget building.
Why You Should Use Excel For Budgeting
Like I said before, I think excel is an underrated tool.
Maybe Excel is a little intimidating for people who don’t use it for work like I do, but I think it makes a lot more sense that using a budgeting app.
Here are the reasons why I think budgeting in excel is a great option.
1. Excel Does The Math For You
This is the main reason I love budgeting in excel.
As long as you get your formulas right (and excel usually tells you when a formula doesn’t work) there’s no chance for your math to be done incorrectly.
I can’t tell you how many little math mistakes I made when I was using a paper budget and calculator. Type one thing in wrong and it can mess up your entire budget.
You don’t have to worry about that when you use Excel for your budget!
2. Excel Is Literally Built For Budgeting
Excel is made to handle and analyze numbers. This makes it ideal for doing a budget.
You don’t have to do any crazy formatting to keep things organized. Numbers are automatically going to be set up in nice, neat rows.
There are formulas that can do just about any type of calculation.
And once you are confident using Excel to create and manage your budget, there are countless options for analyzing the information.
You can even create charts and graphs if you want to see your budget at a glance.
I don’t want you to worry about that if you are brand new to using Excel, but just know that there are a ton of different ways Excel can be used to see how you’re using your money.
3. You Can Customize Everything
My number one issue when trying to find a budgeting app, was that I couldn’t customize things enough to work for me.
I do a budget for each of my paychecks instead of doing it monthly, and I couldn’t find anything that enabled me to do that in a way that made sense.
Because of this, I ended up creating my own excel spreadsheet that I could break down by paycheck and update as I added or removed things from my budget.
Even if you start with a template like mine, you can customize things to work exactly how you need to in order to end up with a budget that works for you.
Plus, you can change the colors and fonts of everything to make it look how you want too!
But, I Don’t Know How To Use Excel!
The only downside to using excel for budgeting is you have to have a basic understanding of how to use the program.
A basic understanding of formulas and how to do them is also useful. Using a template like mine is great because the formulas are all done for you.
It is nice to understand them, though, in case you want to make changes.
Luckily, Excel is pretty easy to learn.
If you’ve never used Excel before I recommend watching this video on the basics of Excel for beginners.
If you want to learn more about formulas and how to do them, check out this video.
How to get Started Budgeting IN Excel
Ok, you have your budget template ready to go and you’re all set to start creating your budget, right?
It’s time to get started!
Here’s a screenshot of my blank budget template to give you an idea of what we’re going to end up with. (If you are using my template then this will look pretty familiar!) Of course, when we’re done all the numbers will be filled in!
1. Set Your Financial Goals
Before you can set up your budget, you have to decide what your priorities are when it comes to your money.
If this is your first budget, you may just want to focus on seeing where your money is actually going. This is a great way to get an idea of how much you are actually spending and what you’re spending it on.
You could also decide to put some money toward saving and some toward paying off debt.
It’s important to know what you’d like to do with your money so that you don’t end up deciding to budget $300 for shoes because you think you have “extra money” after paying your bills, when really you’d like to make an extra payment on the credit card balance that stresses you out.
2. Decide On the Period For Your Excel Budget
No, your budget doesn’t have to be monthly!
Monthly budgets really don’t make any sense to me unless you get paid on a monthly basis, so I don’t do them.
I personally prefer to do a budget for every single one of my paychecks. It’s easier to track my spending and make sure my bills are paid on time.
If you’ve never really budgeted before, you probably won’t know what period will work best for you. My advice would be to start with just one paycheck and see how it works.
We’re going to set your excel budget up using the time period you choose in this step.
3. Add All Your Income
The first thing you want to add to your budget is all your income for the time period you are budgeting for.
For example, if I was doing a budget for my paycheck, then I’d use the total amount of my paycheck as my income.
To get started creating your excel budget, add the source of income to the first column of the budget template. You’ll then put the amount of the income in the next column.
You’ll put this budgeted amount in the “budget” column. Makes sense right?
On my budget spreadsheet, there is a formula that will give you the total of all the income amounts in the next row so you can see the money you are going to be working with in your budget.
This template has additional columns for “actual” which is where you’ll fill in the money that you actually receive (or you actually spend for expenses).
The “balance” column will give you the difference between what you budgeted and what actually happened.
You can see how this will end up looking in the image below.
4. List All Your Fixed Expenses
Now, add all your fixed expenses to your budget.
Fixed expenses are things that you have to pay no matter what, and usually the amounts don’t change.
This is things like rent, utilities, minimum debt payments, insurance, cell phone, etc.
Add these items to your budget first so you are taking care of everything that has to be paid to keep your lights on and a roof over your head before worrying about anything else.
As you can see below, I fill out my budget the exact same way for these. List the name of the expense in the first column and the amount in the “budget” column.
5. Include All Variable Expenses
Next up, add in all your variable expenses.
These are expenses where the amounts can be different each time. These are the categories I like to track the spending of (which I talk about later in this post).
Examples are groceries, eating out, spending money, pet supplies, household supplies, etc.
Same thing here – list the expense in the first column and the amount in the “budget” column.
Figuring out the amount for these can be a bit tricky. You want them to realistic, but not out of control.
Take a look back at what you’ve been spending on your variable expenses for the past few months to get an idea of what a realistic amount would be for these.
6. What Is A Zero-Based Budget?
We are doing a zero-based budget. That means you are budgeting every single dollar of income – you’re giving every dollar a job.
At the very bottom of the spreadsheet, you can see the running total of your income minus all the expenses you’ve entered.
Hopefully, at this point, this is still a positive number. This means you have money left to budget!
If it’s negative, then you may need to go back to your variable expenses and change some things.
If budgeting $150 for eating out and $150 for groceries is causing your budget to go negative, for example, you need to cut back on one or both of those things.
We want this number to be $0 when we’re done with our budget. Zero-based!
Remember when I had you think about your financial goals before we started our budget? That extra money left at the end of your budget is what you want to use to work toward your goals.
At the bottom of my budget template, there is a section for saving and a section for debt payments.
List the savings goals you have and all the debts you have to pay off. Budget the rest of your money to savings or debt payments based on your financial goals.
7. Should You Save Money Or Pay Debt?
I think you should actually be doing both.
Here’s what I think is a good plan:
- Save an emergency fund of between $1,000-$2,000.
- Set up sinking funds and automate transfers to them.
- Create a plan to pay off debt.
Following these steps ensures you have enough savings to act as a cushion for whatever unexpected things life throws at you.
Sinking funds will also make sure you don’t have to come up with the money for big expenses like Christmas or vet costs all at once.
Once you have a buffer of savings, decide on whether you want to use the debt snowball or debt avalanche method.
From there, focus on paying off your debt!
8. Tracking Your Spending in Excel
Tracking your spending is a sometimes forgotten, but essential part of budgeting.
If you create a budget but then don’t actually track whether you are sticking to your plan, you will always be frustrated with yourself for overspending.
One of my favorite things about using Excel for budgeting is that I can set it up to automatically fill in my spending in the “actual” column for my variable expenses.
I have the budget template set up to do this for you.
Just fill in the category names for the things you want to track spending in.
For me, these are groceries, pet supplies, gasoline, and my personal spending money. You can see below how I have the boxes set up for these categories.
Just enter each transaction when you spend money in one of these categories, and it will automatically update the “actual” and “balance” columns.
You’ll always be able to see how much you have to spend for each category.
This is the best part about budgeting in Excel for me – I can set up things to make the budget and spending tracking process as easy as possible.
Conclusion
There you have it! You now know how to get started budgeting in excel.
I know it can be overwhelming if you aren’t a regular excel user, but I promise it’s worth learning!
It’s up to you to get your budget done now – make sure to download your free excel budget template and work through everything mentioned in this post.
And let me know down below in the comments if you have any issues!
Here are some other posts you’ll enjoy:
- Get Your Finances on Track with a Printable Budget Planner
- 7 Tips to Save Money and Reduce Spending
- How to Manage a Successful No Spend Month
- How to Get Started Creating Your First Budget
