Building a Budget System Using Spreadsheets
You don't have to be a spreadsheet wiz to create a money management system on either Microsoft Excel or Google Sheets.
1. Start with a template.
Building your money management system from scratch may seem intimidating at first, but creating one that suits your needs and preferences is better than spending hours getting used to a tool with too many features you don't need (or understand).
Creating your own template allows you to personalize and only include the necessary elements in the system. If you're unsure where to start, you can check out the templates below:
● Google Sheets Monthly Budget Template - Select "Monthly Budget" from the Template Gallery on Google Sheets.
● Microsoft Excel Budget Template
● Monthly Expense Tracker from Tiller HQ
● 50/30/20 Budget Snapshot from Tiller HQ
2. Add dropdowns with data validation.
In Google Sheets, you can use data validation to create dropdown lists into relevant groups to easily classify the category of every transaction, making it faster to fill and categorize data.
First, create a list of category names. Then, go to Data on the menu, and select Data validation. Choose "List from range" as the criteria, and then select the category list you created.
3. Use comments for documentation or notes.
If you need to include a note to a transaction for reference, insert a comment instead of writing the details in the cell to keep things tidy. In case you need to take note of specific transactions that are different from usual, insert a comment in the sheet instead of writing the entire detail in the cell. Also, you wouldn't want to adjust your template just to fit the text, would you?
If you need to write a lot of notes often, perhaps it will be better to dedicate a notes column where you can see all the important records you may otherwise forget at a glance.
4. Organize your budget using shading.
Looking at a budget spreadsheet filled with data and without any format, borders, or color-coding can make anyone's head burst from confusion.
One of the best ways to make your budget easy to read is to separate sections with colors, highlight headers in bold, and change the font color of amounts into specific colors (e.g., total expenses to red and remaining balance to blue). Doing this can divide sections accordingly and make looking at your budget easier.
5. Master the basic formulas.
Don't be intimidated by spreadsheets and the number of formulas that come along with using them. Contrary to what you think, creating a budget using spreadsheets doesn't require advanced knowledge about formulas.
Getting the basics down, such as SUM, AVERAGE, MIN, MAX, and using data validation, are enough. From there on, you can explore other formulas like SUMIF, COUNTIF, AVERAGEIF, and more. You can view Google Sheets' function list here and Microsoft Excel's functions here.
6. Set budgets and highlight spend to maintain awareness of your spending.
To effectively track your spending and understand your money, you have to establish your income and expenditure for a period of time, usually monthly. You can use simple formulas like SUM and IF functions to track how much money goes in and out of your pocket or bank account.
You can indicate this in the summary sheet like the example below (see: Totals under Planned, Actual, and Diff) for a clear view of your spending.
7. Represent your finances with visual graphs.
Graphs are easy to comprehend. Plus, they make reading and understanding data a lot more pleasing. With graphs, you can quickly track your expenditures and see how your finances compare every month. It's also easy to spot unnecessary and impulsive purchases, as well as unwelcome transactions you're not aware of or may have forgotten.
8. Use COUNTIF to track payments of services or your spending habits.
Do you think you order take-outs or deliveries way too much in a month? Perhaps you find yourself shopping impulsively more than usual?
The COUNTIF function is helpful when you input many transactions per month for different categories and purposes. The function can tally how often you spent on shopping, food, and other categories. It keeps your bad spending habits in check and helps you manage your budget better for the following months.
9. Create a summary of your expenses and income.
Create a tab labeled as "Summary" where you can lay out a concise comparison between your planned income and expenses and your actual income and expenditures. This sheet should contain a summarized version of your monthly transactions, allowing you to see only the critical information you need to plan how you'll manage your budget for the next month.
10. End every monthly budget with a report.
Looking at all the numbers in the spreadsheet can be overwhelming, and it may cause you to miss a few crucial points. In your summary tab, write a short "report" of your monthly budget to get a good overview of your finances for the month. Use bullet points and keep the sentences short and succinct for better reading.