How to Use a Budget Spreadsheet

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Budgeting is important in both business and personal finance. In business, you need to know what your situation is and how financial decisions you make on a daily basis will affect your fiscal year-end. From a personal viewpoint, budgeting accurately for monthly expenses will help to avoid getting into debt and you will know how much you can afford to spend on clothing, entertainment and other luxuries. A spreadsheet can do it all for you, whether you are budgeting for business or personal use.

  • Set up your spreadsheet using a program such as Excel, Quicken or Lotus 1-2-3. These programs offer spreadsheet technology that is relatively simple to use, and all are compatible with Windows.

  • Create a file with a tab for each month. In the first section, list your expected income for the month. Use the @SUM formula to add up the column, so that if you change an item your total changes automatically.

  • List your expenses for that month in another section on the same tab. Group them into categories with headings such as "Living Expenses", which would list rent or mortgage, utilities and groceries below the heading. Another category could be "Bills," which would list car installments, school fees, and other regular bills that vary in value.

  • Make a category called "Spending Money," under which you list all the luxury items you plan to buy that month. These could include new clothing for a special occasion, or a trip that you might need to make for a family wedding. In this way, you are able to budget well in advance for any major expenses.

  • Create a tab called "Summary" and enter the names of all the months. Make a column for income and one for expenses beside each month. In the income column beside the name of the month enter the "equals" sign, then go to the worksheet tab for that month and click on the cell containing the income total.

  • Do the same thing for the expenses for that month, selecting the cell with the expenses total from the worksheet for the month. Repeat for all the months and use the @SUM formula to total both income and expense columns on the summary sheet.

  • Subtract the expenses from the income for each month in a column called "Surplus," and total that column at the bottom as well. Plan to save surpluses and you will have a nest egg at the end of the year.

  • Enter the amounts you pay or spend each month accurately on the relevant worksheet. Show any changes in your income, and add any new expenses under the appropriate category heading.

  • Check your budget summary regularly. This will show at a glance how every change made on the monthly worksheet affects your position. You can see at any time how your finances were managed for months that have passed, and what your financial position will be at year-end.

References

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