How to Do Monthly Financial Budget Planning with Excel

Financial budget planning is so important for staying on track with your money. Without properly doing your finances, money might not be enough for essentials like utilities, groceries and mortgages. By carefully doing a financial budget planning every month, you and your family will not have the risk of not being able to afford essentials. There are other benefits that are associated with planning such as find out how to save more money and avoid unnecessary spending that you are not aware of.

Difficulty:

Moderately Easy

Instructions

Things You'll Need

• computer
• Microsoft Excel

1. Microsoft Excel is a great tool for your financial budget planning. It is better than writing it on a paper and doing your own calculations. Excel is very convenient to use because you can easily plot a variety of different graphs to clearly see things visually. I have an example to illustrate how you can prepare a monthly budget for yourself and your family.

2. deductions

   A monthly financial budget planning starts from the very beginning, your gross income. You can contribute to deductions (401K, 457, IRA and anything else that qualifies) before tax. Basically, these deductions are taking out directly from your gross income without you ever seeing it. It is a very good way to automatically save money. It is also beneficial because your total taxable income is less than gross income. You will pay less tax on your money. The deductions are voluntarily, so you don't have to contribute if the monthly budget is tight. But it's highly recommended for everyone.

3. Good monthly financial budget planning should taken into account your retirement contributions. If your employer offers matching for 401k, take advantage of it by putting away at least the amount that they match you. It is free money for your retirement.

4. pie chart on spendings

   Make a spread sheet in excel for all monthly necessary spending. Take time to think about it carefully and distinguish necessary from unnecessary. Make sure what you include in this category is all necessary spending that you have the responsibility for. When you are using excel, plot it in a pie chart. Then, you can visually see how much you are spending in each category. Although it is called monthly necessary spending, you can still cut back on some categories. When you have a very tight monthly budget, you can find cheaper apartments or share with someone in similar situation. Nowadays, everyone has a cell phone plan. But there are ways to save on cell phone charges as well.

5. Good financial budget planning for the month should include emergency funds. Some people might say that leftover money should be your emergency fund. But it's better to include the emergency fund in your necessary spending. Because it is very important to have some money in the bank in case you need it for something unexpected such as lay off.

6. non-necessary spendings

   Make another spread sheet in excel for all monthly unnecessary spending. Be realistic because everyone spends money on some unnecessary things. Take time to think about your social activities and write down everything you spend money on that's not essential. For example, this category includes things like entertainment, clothing and accessories, traveling, eating out and etc.

7. One of the most important rules about financial budget planning or any other budgeting is that don't spend more than you make. If you do, you will be in credit card debt and it will most likely increase with age. Make sure you follow the monthly budget. And if you go over in one month, make sure you cut back in the second month.

8. Subtract your total spending from take home income. If it's a negative number, plan your budget again because you are spending more than you make. If it's zero, it's not good either. Because you want to have a few dollars left each month for unplanned situations that you have to attend. If you don't end up using it, just put that money in your emergency fund.

9. With excel, plot all your spending in a pie graph so that you can see exactly where your money goes. This also makes it easier for you to understand where to cut back.

Resources

• The Budget Kit