Budgeting is an essential part of money management. Without any kind of plan, you can end up living paycheck to paycheck, accumulate debt, and miss opportunities to save. Excel can be a powerful budgeting tool that allows you to track your income and expenses and plan for future financial goals.
Below, we’ll walk through the process of creating a budget in Excel, either from scratch or using a template, plus offer tips on how to track your spending, set financial goals, and avoid common budgeting mistakes.
Key Points
• To create a budget in Excel, you can start with a blank workbook or download a premade budget template.
• When starting from scratch, you’ll need to list income sources, expense categories, and months.
• Once you add data, you can calculate totals using the SUM function.
• Customization options include adding financial goals, charts, and graphs.
• Using a premade budget template offers a ready-made structure, saving time and allowing you to focus on entering financial information right away.
How to Use Excel to Make a Budget From Scratch
The steps below will help you use Excel to create a basic budget that tracks monthly income and expenses over one year on a single spreadsheet. Once you nail the basics using Excel for budgeting, you can customize your spreadsheet to create all different kinds of budgets from scratch. Here’s how to get started.
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Step 1: Opening a Workbook
To begin creating a budget in Excel, you’ll need to open Microsoft Excel and create a new workbook. This blank spreadsheet will serve as your budgeting tool. Note that the columns are letters (A, B, C, D, etc) and the rows are numbers (1, 2, 3, 4, etc). We’ll refer to each box in the spreadsheet, such as A1, B2, C3, as a “cell.”
Step 2: Adding Income
To start your budget, add your sources of income. Skip a row from cell 1A and label box 2A “Income.” After Income, you’ll want to list down all sources of income (in cells 3A, 4A, etc.). You might only have one or two sources of income (such as “Salary” and “Tutoring”). Or, you might have several if you earn a paycheck plus extra money through another side gig and/or you have passive income streams like real estate income or investment dividends.
Label the final box in your income list “Total.”
Step 3: Adding Expenses
Skip a space under the Total cell in column A and write “Expenses.” Next, you’ll want to list your regular expenses down column A in the same way you did Income, with the final box labeled “Total.”
Step 4: Adding the Months of the Year
In row 1, column B (which is cell B1), you’ll want to enter “Jan.” To have Excel add the rest of the months for you, simply select cell B1, click the lower right corner of the cell, and drag it across 12 cells to column M (or cell M1). Excel will fill in all the other months.
Step 5: Entering Data to Start Budgeting
Now it’s time to start entering income and expense data for each month that you have available. In the cells labeled Total, you’ll need to enter the SUM function. To do this, select the cell and type “=SUM” followed by the cell range you want added together in parentheses, then press Enter.
For example, if you only have two sources of income listed in column B (cells B3 and B4), you’d type “=SUM(B3:B4).” To add the SUM function for each month, simply click the lower right corner of the cell and drag it across all the rows through to the “Dec.” column.
Note: You can also add a “Year” column after Dec. to get your totals for the year. To do this, you’ll need to add the SUM function to the first cell under “Year,” then drag it down so you can get year-end totals for each source of income and each expense category.
Step 6: How to Track Spending and Stick to a Budget
An Excel budget allows you to quickly see how your income and spending line up. To do this, you can add a “Balance” heading in column A, under your Expenses section, to subtract your expenses from your income. (You might skip a row for a cleaner look.) Next, use the SUM function and input the cells you want subtracted from each other, such as “=SUM(B5-B12).”
Ideally, you’ll end up with a positive (rather than a negative) number in your Balance cell.
Step 7: Adding Some Goals
To take your budget to the next level, you’ll want to think about your goals and how much you need to save each month to achieve them. Short-term goals might include building an emergency fund, paying off credit card debt, or saving for a vacation. Long-term goals might include funding your retirement and saving for a child’s future college education.
If your Excel budget shows that your monthly expenses are close to or higher than your monthly income, you’ll want to comb through your regular expenses and find areas where you can cut back. Any money you free up can then be redirected towards saving for your goals.
To help ensure you make progress towards your goals, you might add them as line items in your budget. This allows you to allocate money towards saving each month, just as you earmark money for expenses. Once you know how much you want to save each month, consider setting up an automated monthly transfer from your checking account to a high-yield savings account for that amount.
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Customizing a Pre-Made Excel Budget Template
A quicker way to create a budget in Excel is use one of their many premade budget templates. Simply go to File>New, then search for the term “budget.” You’ll see a library of budget template options, including a personal monthly budget, household budget, college budget, and vacation budget.
Using one of these templates may allow you to create a more detailed budget. For instance, a template might include “Projected” and “Actual” income and expenses and tabulate the differences.
You can also customize an Excel budget template to make it suit your needs. For example, you can add rows or columns by selecting where you want to add a column or row, right-click, then scroll down to “Insert.” You’ll then have the option to add to “Table Columns to the Left” or to “Table Rows Above.”
In addition, you can get rid of sections that aren’t relevant to you. For example, if you don’t have any loans, you can delete the “Loans” row under the Monthly Expenses tab by right clicking the tab, select “Delete” and “Table Rows.”
How to Track Spending and Stick to a Budget
Once you prepare an Excel budget, you’ll have a sense of your average monthly earnings and spending and how they line up. You may also have a clearer idea of your goals, and how you want to tweak your spending to help you achieve them.
To better manage your money and stick to your spending targets, it’s a good idea to track your spending — at least for a month or two. You can do this by carrying around a small notebook and pen and making it a habit to record every transaction you make (or, you could use the Notes app on your phone). A higher-tech option is to use a budgeting app that links to your credit and debit cards directly. These tools automatically record and categorize your transactions for you (though you may still have to track cash payments).
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Tips for Maintaining Your Excel Budget
To make sure your budget is effective over time, consider these tips:
• Review your budget monthly: This can help you assess spending patterns and determine if you need to make adjustments in your budget or spending moving forward.
• Refine categories: As you track spending, you may find that you need to adjust spending categories listed on your budget. You may also decide to change your savings goals based on changes in your habits or financial priorities.
• Use charts and graphs: Excel allows you to create graphic representations of your data. These charts and graphs can help you visualize where money is going, analyze spending trends, and identify any problem areas.
Recommended: Savings Goal Calculator
Common Mistakes to Avoid When Budgeting in Excel
Excel can be a highly effective budgeting tool when consistently and correctly. Here are some common pitfalls to avoid.
• Ignoring small expenses: Minor purchases — like a latte here, a bagel sandwich there — can add up to a sizable sum and impact your budget.
• Overcomplicating the spreadsheet: Keeping your Excel budget layout simple can make it easier to manage. If it becomes too time consuming to fill in your data, you might simply give up on budgeting after a few months.
• Not accounting for irregular expenses: When listing expenses, it’s important to factor in irregular costs like quarterly bills and annual fees. You can do this by estimating the annual cost, then dividing that sum by 12 to come up with a monthly cost.
Excel Budget Template Examples
Here are some examples of different Excel budget templates you can use:
• Personal Budget: This offers a simple layout for tracking income and expenses. Monthly and yearly totals are calculated and the spreadsheet is fully customizable.
• Personal Monthly Budget: This template allows you to hone in on one month at a time. You can also set expected income and expenses, then input your actual income and expenses and see how they line up.
• Holiday Shopping Budget: This Excel budget template makes it easy to organize your holiday shopping. You can track what you want to purchase, what you have purchased, how much it all cost, and even if it’s been wrapped or not.
• Wedding Budget: You can use this template to track spending on flowers, reception, photography, and more. It also records estimated versus actual costs and calculates the difference.
The Takeaway
An Excel budget can be a simple and effective way to manage your money. Whether you build one from scratch or use a premade template, Excel allows you to organize your income and expenses, use built-in calculators for accuracy, and create visuals that highlight trends and offer insights into your financial health.
Once you have a clear picture of what’s coming into your bank account each month and where that money is going, you can take better control over your finances, start siphoning more into savings, and get closer to your goals.
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FAQ
How often should I update my Excel budget?
It’s a good idea to update your Excel budget monthly, as this can help you identify overspending, adjust for unexpected expenses, and keep your financial goals on track. It’s also a good idea to check in on your budget whenever there are significant changes to your income or expenses. This can help ensure your budget stays aligned with your financial situation.
Can I use Excel for both personal and business budgeting?
Yes, Excel can be a good tool for both personal and business budgeting. Personal budgets focus on tracking income, expenses, and savings, while business budgets typically include additional elements like cash flow, profit and loss statements, and financial forecasting. Excel allows for multiple sheets within a single workbook, making it easy to manage different aspects of your financial life separately.
How do I handle irregular income in my Excel budget?
To handle irregular income when budgeting, you’ll want to come up with a monthly average based on historical data. For example, if you’re expecting to earn at least $12,000 for the year from freelance work, you would allocate $2,000 a month to income, and use that money to offset monthly expenses.
What are some advanced Excel features that can enhance my budget?
Excel offers a number of advanced features that make budgeting more effective. For example, you might tap advanced charting options to turn your data into pie charts and line charts or use Conditional Formatting to highlight all negative numbers in red and positive numbers in green. Another helpful feature is PivotTables, which allows you to extract data from a larger spreadsheet and put it into a smaller table and even reorganize the data.
How can I visualize my budget data in Excel?
Visualizing budget data in Excel can be a great way to track spending and identify trends. For example, you might create a pie chart to show the proportion of your income you allocate to each spending category. This quickly highlights where the majority of your money is going and can uncover areas where you may be overspending. Or you might create a bar graph that illustrates your spending in different categories for each month of the year. This can help you to see patterns and seasonal fluctuations.
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