“Budgeting Made Simple: How to Use Spreadsheets to Track Your Money”

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Budgeting with Spreadsheets: A Cost-Effective Approach

Budgeting apps can simplify setting spending goals and tracking your income and expenses, but many come with subscription fees and require access to your private data. If you’re seeking a more affordable and customizable way to manage your finances, a budget spreadsheet might be the perfect solution. Although it requires some initial setup, it offers complete control over your budget and the features you want to include.

1. Choose Your Software and Template

Excel and Google Sheets are popular spreadsheet programs, but MacBook users can also utilize the Numbers app. Google Sheets is accessible online, allowing you to manage your budget from anywhere. For maximum security, Excel and Numbers can keep your file on your hard drive, with optional online access via Microsoft OneDrive or Apple iCloud.

If you’re new to budgeting or unfamiliar with spreadsheet formulas, search for budget templates to get started. You may need to customize these templates to fit your needs. Experienced budgeters can create their own from scratch.

2. Calculate Your Income

List all your income sources and include them in your budget spreadsheet. If you have a fixed income, such as a salary or retirement distributions, you won’t need to update it monthly. However, if your income varies, estimate your monthly earnings based on past averages or expected income.

3. Categorize Your Expenses

Your budget consists of fixed and variable expenses. Common fixed expenses include:

• Rent and mortgage payments
• Other debt payments
• Savings and investments
• Insurance premiums
• Phone, internet, and subscriptions
• Child care costs

Since these costs remain constant, you don’t need to set goals for them. Variable expenses, which can change monthly, include:

• Groceries
• Utilities
• Fuel
• Dining out
• Clothing
• Travel

Each month, review your income and fixed expenses, then set spending goals for your variable expenses based on your remaining funds.

4. Decide How Often to Update Your Budget

Since expenses can fluctuate, it’s wise to set spending goals monthly. Determine how often you’ll update your transactions and evaluate your budgeting process. If you have numerous expenses, consider updating your budget daily. For less frequent oversight, weekly updates may suffice. Review your overall budget strategy quarterly, semi-annually, or annually to ensure it aligns with your financial goals.

5. Enter Your Numbers

With all the necessary information and timing set, start inputting numbers into your spreadsheet. Use one worksheet for your income and budget goals, broken down into spending categories. Use another worksheet to detail transactions as they occur, noting the merchant, transaction amount, and spending category. Formulas in the first worksheet can automatically update your spending for each category. Many budget templates include these formulas for convenience.

For more detailed financial insights, create a third worksheet with various reports, such as spending trends and your current net worth.

6. Maintain and Stick to Your Budget

Creating a budget is one thing, but maintaining it over months and years can be challenging. Budget spreadsheets require manual data entry, which can be time-consuming. To stay motivated, regularly remind yourself why you want to manage your money better and focus on the benefits. Continuously evaluate your approach to ensure it’s realistic and achievable. If a budget spreadsheet becomes too labor-intensive, consider using budgeting apps to reduce the time spent updating your budget.

What if You Can’t Stick to Your Budget?

If you’re struggling to adhere to your budget, consider making behavioral changes. Cooking at home, reducing credit card use, and driving less can help lower expenses. Look for ways to increase your income and reduce fixed expenses, such as canceling streaming services or switching to a cheaper insurance provider. Improving your credit can also help you save on interest when borrowing. Monitor your credit alongside your budget to track progress and address issues promptly.

At O1ne Mortgage, we understand the importance of effective budgeting. For any mortgage service needs, call us at 213-732-3074. We’re here to help you achieve your financial goals.

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