In a prior series of posts I walked through a comprehensive budgeting spreadsheet that I’ve used for years. If you’re interested in a powerful excel based budget visit Jump your mental hurdle and work through the 3 posts in that series. If you’re not ready to take on a comprehensive budget for long term planning then a simple ledger sheet might be better for you. You may also want to look into a web based idea such as YNAB.
There’s nothing complicated about what we’re going to discuss in this post. However, if you’re trying to get a grip on your finances and are new to budgeting this is a good place to start:
- Use monthly sheets similar to this to track your monthly income and expenses. Some people choose to do this on paper, but my advice is to make this easy on yourself and use Excel.
- Set up categories that fit your life. Try to create separate categories for your monthly bills that are about the same each month, phone bill, mortgage, utilities etc. You will also have a variety of categories that change each month, groceries, eating out etc.
- As you go through the month start filling out the categories, you should try to stay on top of it throughout the month so you know how you’re doing during the month.
- If you’re using Excel I would suggest that off to the side you should track each of your categories that aren’t the same each month, groceries, eating out etc. Link the total to the proper category.
- Subtract your expenses from your income, if the number is negative you’ve spent to much. Do better next month.
That’s all there is to it, this process will help you to understand how you spend money and hopefully get you on a path to improving your financial health. As you get use to this process you can add more pieces to your budget. This process is very similar to the concepts that I discussed in Getting a grip on your monthly expenses, creating your budget.