If you have very little experience managing money, developing a budget can seem like a monumental task. Like any job, though, if you take a moment to break it down, building it back up becomes that much easier. Developing a budget is a must when it comes to saving money and finding more time to spend with your loved ones.
There are dozens of different apps and programs out there to help you budget but I’ve found that using Microsoft Excel is the easiest and quickest way to start getting a handle on your finances. But before you even take that step, grab a pen and paper.
Step 1 – Make a list of every bill you have each month
Maybe I’m alone in this, but I love working with pen and paper. Just like I prefer reading an actual book instead of a Kindle, there’s something familiar and easy about writing out a list versus typing one.
Step 2 – Write the due date next to each bill
You’ll notice many of my bills are due on the 15th. This is on purpose. Many companies will work with you on your due dates and this will definitely make bill paying a lot easier (if you happen to get them on the phone, don’t waste the opportunity to negotiate lower payments!)
Step 3 – Make sure you didn’t miss anything!
Go back and take a look at your last couple checking account statements. Are there any recurring monthly payments that you’re missing? As you may have caught from my pictures above, I forgot to include our car insurance payment. At $81/month, that easily could have sent my account into the negative if I’d left that out of my budget!
Step 4 – Add it all to Excel
This process is easiest if you’re paid twice a month (like the 1st and the 15th) but it’s not impossible if you’re paid bi-weekly, it just takes a little bit extra work to make sure your payments are where they’re supposed to be.
If you’re unsure as to what you might get each pay period, use the minimum needed to get by as your starting point. If you’re afraid you’ll make even less than that, now is the time to look into developing additional streams of income!
First, input your current checking account balance and any bills/expenditures that are currently pending.
Next, enter your paycheck date and the amount you’re expecting.
Then insert your budgets for food and gas/transportation (two necessities of life). For my family of four, I budget $200 per check for food and $90 for gas. Limit yourself here but don’t push it so far that you’re going to repeatedly go over budget; like dieting, if you can’t stick to what you’re doing, adjust before you find yourself eating a quart of mint chocolate ice cream at 9pm.
Now go through your list and enter everything that will need to be paid between that paycheck date and the next one. Cross them off as you go.
Once that’s done, enter the sum formula which is: =SUM(CELL#1:CELL#2) but replace CELL#1 with your starting cell number (example: B1) and CELL#2 with your ending number (B10). You can then highlight the cell and click the box in the lower right corner to drag it over one, thereby allowing you to transfer the formula to the “actual” column as well.
Now you’ll see what your balance will look like after your bills are paid. Your sheet should look something like this:
Now do the same for your next paycheck and then go back through and highlight any bills you have to manually pay. Hopefully those are only a few. If you don’t have auto-debit for most of your bills, get those set-up ASAP.
Now you’ve got something like this:
Copy and paste this entire selection, save for row 1. Set your budget up for the entire year (or at the very least, the next 6 months!) so you have a full grasp on what your financial world truly looks like:
Once you’ve covered your regular monthly expenses, go back through and factor in your other bills/expenses. Our garbage, for example, is only paid quarterly so I have to make sure I’ve got it in our budget every three months.
If you’re still confused, you can check out this quick 5-minute video to see me do it in real time!
Some things to consider in your budget:
- Anniversaries – not just yours, but your parents and anyone else that may warrant a gift/dinner from you
- Birthdays – we budget $100/kid – which includes the parties – and $50 for each other
- License plate renewals – $101 each here in Illinois
- Holidays you celebrate that you may want to buy not just gifts, but decor – Christmas, Halloween, St. Patrick’s Day, Mother’s Day, Father’s Day
- Diapers/wipes if you’ve got kids still in that stage – see my post on how to save money on diapers! We budget $40/month for those and we’ve got two in diapers.
- Vet bills or any other pet expenses (food, litter, etc.)
- Gutter cleaning
- Oil changes
- Vent cleaning
- Furnace filter replacement – we’ve got terrible dust allergies so buying a quality filter is a must. We spend about $45 on these annually but I’ve noticed Ace Hardware often has rebates on them. Last time we spent $36 for four but got $12 back!
- Toiletries – we budget about $30/month
- Clothing (check out how to get kids’ clothes for free!)
- Misc./Savings (if currently possible)
As you develop your budget and begin to better get to know your spending habits, you won’t have need for a “miscellaneous” category. When I first developed mine, though, I had one because I didn’t have a clue as to what I spent each month on toiletries, cat food, etc. The great thing about using Excel like this is that it’s easy to adjust and add to it as needed!
After your budget is complete, you’ll want to plug in your purchases as you make them. The great thing about Excel is that you can save it to Google Docs and always have it on hand so you know exactly how much money you have at all times. Make sure you always go into your budget spreadsheet on the day you get paid and get those bills paid for that period!
And that’s it! Setting up a budget doesn’t have to be terrifying. Believe it or not, I actually find it incredibly fun – something I’d have thought insane if you’d asked ten years ago.
Do you already have a budget system in place? What do you struggle with? Is there a budgeting system you prefer over my Excel method?
If this still makes little-to-no sense to you and you’re feeling overwhelmed, please e-mail me! I wasn’t kidding when I say I genuinely enjoy this work and I’m happy to help you get started (free of charge!)
While you’re at it – be sure to call first dibs on my latest time and money management freebies by signing up for my weekly e-mail list!