This post helps readers answer the question “How to Make a Budget in Excel” and provides suggestions for both pre-made templates and creating one from scratch. Keep reading for more on getting your budget setup, today!
Looking for a simple template in Excel? I’ve got you covered! (a link for the download is included, below).
How to Make a Budget in Excel
Budgeting is easier than you might think! This post covers a brief introduction on Budgets, provides some suggestions on what to look for in a pre-made template, how to make one from scratch, and a step-by-step guide based on my free downloadable template!
What is a Budget, and why do I need it anyway?
Learning how to create and follow a budget is essential for managing your finances. Certainly, there are many variations of how to budget; the key is to find what works well for you and your family. With a budget, you’ll gain better control of where your money is going, be able to prioritize and achieve your financial goals, and reduce stress in your life.
Excel Budgets can be adjusted to whatever you need them to do! For some, this will include tracking each and every transaction by hand, updating the fields in excel as you go. For others, the excel portion is a starting place for planning (i.e. a Pro-forma budget) where the actual expenses are tracked electronically (e.g. via Intuit’s Mint).
This post will review one of the budgeting options, help build Mêtis in Budgeting Matters, and support readers looking to answer the question “how to make a budget in excel.”My friend, I’m excited to cover this with you! Let’s draw on motivation, build discipline, and get after it!
How to Make a Budget in Excel using Pre-made Templates
One of the ways I started with budgets was using pre-made templates. There are many options to pick from, so feel free to try a few to see what works the best. If you’re not happy with the way a particular template works, then feel free to try another one, etc. From trial-and-error, you’ll quickly realize what you like and what improvements are needed.
Here are few examples of what you can find from Microsoft Excel. I’ll say that I find these a little over-board. Sure, the features are cool, but my experience has been these end up taking a lot of time to maintain and tinker with. Still, some people may enjoy the detail and the process!
Here are some Examples of Budget Templates from Microsoft (download in Excel).
How to Make a Budget in Excel from Scratch
Not interested in using a pre-formatted template? Or, perhaps like what my story has been, the templates are a great starting point and you prefer to make it your own. Before long, I had figured out what worked and what didn’t. From there, I ended up creating a very simple budget template for my Pro-forma budget. I then tracked the expenses with Mint and updated/ adjusted my template each month-end as needed.
Practice Makes Perfect!
To me, the key is to give yourself permission and room to fail. A flashy budget with all the bells and whistles also requires work to maintain. Start small, and commit to what you have in front of you for one month. Then take inventory, see what works and what doesn’t work.
From there, make improvements for the next month and see how that operates for you. As I’ve mentioned, we found the bonus features to be a little overwhelming and distracting from the overall objective of managing our finances.
Less can be More!
As we get to suggestions on essential components of a budget, keep in mind that starting with a little less could be more effective. This is a marathon, not a sprint. As the old expression “know thyself” says, take a moment and think about what is going to work well for YOU. Over time, you’ll become better and more efficient. Look at your spending patterns, group by type, and get more granular as needed over time (“zoom-in” as needed later, but start by looking at the skyline).
Steps to Create your Pro-forma Budget in Excel
As a suggestion on how to get started, we’ll walk through my free downloadable excel template. Feel free to customize as you go!
Firstly, you’ll need to write down your sources of cash Inflows. This can be anything where money is flowing into your bank account. Enter that in column C, in cells 4,5,6. The subtotal of these is listed in C7. That will be your total take-home pay for the month.
Next, you’ll list cash Outflows. These are cases when your money is moving out of your account. It includes investments, bills, and savings. The categories included are ones that have worked well for my family. However, as with the first step, feel free to customize as needed! List the amounts in column C.
As you complete all outflows, you’ll now come to the subtotal for the Outflows. This is where you’ll be able to see the total for the month (cell C51, in the picture below).
Finally, after you’ve listed the Inflows and Outflows, you’ll want to make sure you are within budget. For this, look at cell C54:
- > 0 (positive), you are under budget and can increase allocations in one of the blue outflow categories.
- = 0 (positive), it means you are perfectly tied out and on budget.
- < 0 (negative) then you are over budget and need to cut back or trim one of the blue categories.
With the Pro-forma budget now filled out you have an idea of what you’re trying to accomplish for the given month. As you go through the month, each transaction should fit into one of these blue categories (from previous steps, above). If your actual spending deviates, then you’ll need to decrease another category to keep your total inline.
Essential Components of a Budget
Especially if this is your first time budgeting, pre-made templates can be helpful. I recommend keeping a Pro-forma budget and an actual budget; two sides of the same budget “coin.” A good budget will have general categories, like these:
- Net Income (this is your take-home pay)
- Housing (rent, mortgage, etc.)
- Utilities (trash, electric, propane, etc.)
- Food (groceries, not including “entertainment” like eating out)
- Mad Money
- Personal Care (toiletries, soaps, etc.)
- Pet Care
- Automobile (payments, maintenance, oil changes, etc.)
- Sinking Funds (as needed, customized to you)
- Emergency Fund
- Home Maintenance (improvements, etc., can also be listed under sinking funds)
- Student Loans
- Saving for College (529 Plans)
- Life Insurance
- Roth IRA (and/ or other retirement accounts)
- Gym Memberships
- Garden/ Yard (optional)
- Kids Activities (swimming lessons, piano lessons, martial arts, etc.)
- Shoes and Clothing
Customize as needed…
This list is a general starting point. You’ll likely need to adapt in order to meet your income, cashflows, and bills. Regardless, try to make it detailed enough to allow visibility and decision-making.
As a rule-of-thumb, I try to look for logical groupings of expenses instead of listing every single item. This leads to the next point I’d like to make…
…but, avoid too much granularity!
I’ll caveat that statement by recommending users avoid being too detailed. I have found too many details can be overwhelming even for experienced users. An example of this is the “Personal Care” category. I like to lump bar soap, q-tips, shampoo, and toilet paper (etc.) all into this category instead of breaking it out individually.
Unless you have a lot of trouble managing a particular budget item I try to elect for a broader category. This helps with efficiency in the budget process, and it provides me a better understanding of the amount of money going to a particular category so I can make decisions about cutting back or increasing as needed.
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