The best way to improve your finances is to arm yourself with knowledge and tools to understand your spending. Learning how to make a budget spreadsheet is a smart financial practice regardless of income level. A dedicated tool for tracking expenses and monetary goals sets you up for success.
Knowing you need to create a budget spreadsheet and sitting down to create one that’s customized for your finances are two entirely different chores. How do you know what you’re supposed to include and how to calculate everything? We’ve got you covered.
Experts Featured in This Article
Erika Rasure, PhD, is the chief financial wellness advisor and client financial therapist at Beyond Finance.
Justin Haywood, CFP, is the president and co-founder of Haywood Wealth Management.
How to Make a Budget Spreadsheet
Have a Money Date with Yourself
Before you make a budget, you’ll review your current finances. “The first step to changing your financial future is understanding where your money is today,” financial therapist Erika Rasure, PhD, explains to PS. Sit down with yourself and a partner, if you have one, and dedicate a few hours to looking over your finances.
Dr. Rasure explains how to go about your money date: “You’ll do an audit of your accounts. How much money do you have in your checking and savings? How much do you owe? How many creditors do you have? Knowing information like this will help you create a plan.” Audits can seem a bit daunting and intimidating, but it doesn’t have to be. Instead, think of this experience as an empowering step to controlling your finances.
Understanding Your Expenses
Before you dive into creating a budget spreadsheet, it’s crucial to understand the primary types of expenses you’ll have: fixed and variable.
Fixed expenses are recurring costs that remain relatively consistent in amount over a specific period, usually monthly. These expenses are predictable and required to maintain your day-to-day life. Fixed expenses form the foundation of your budget planning.
Examples of fixed expenses include:
- Rent or mortgage payments
- Utility bills such as electricity and water
- Insurance premiums for auto, home, and life insurance
- Loan payments such as car, personal, or student loans
- Internet and cable
- Subscription services such as streaming services or gym memberships
- Childcare
Variable expenses fluctuate from month to month, depending on your usage, consumption, or other factors. These expenses are inconsistent, making them less predictable and more flexible within your budget. Variable costs can be adjusted or cut back more easily than fixed expenses, making them a primary area for managing your budget.
Examples of variable expenses include:
- Groceries
- Household supplies
- Transportation costs such as fuel, parking fees, maintenance, or public transit
- Dining out
- Entertainment such as movies, concerts, or other events
- Clothing and accessories
- Healthcare costs, specifically out-of-pocket expenses not covered by insurance
- Charitable donations
You’ll also likely have periodic expenses that don’t occur monthly, such as vacations, gifts and holidays, or annual fees. Wealth management expert Justin Haywood, CFP, tells PS, “Large one-time expenses should be budgeted for the entire year and divided by 12 to allocate a monthly amount.”
The final expense you’ll factor into your budget are savings and investments. This includes an emergency fund, retirement contributions, and any other long-term savings goals you have. Common long-term savings goals include a new car, home purchase, home improvements, tuition, weddings, or debt repayment.
Take Advantage of Free Budget Spreadsheet Templates
Crafting your own budget spreadsheet from scratch is a daunting task. Luckily, there are plenty of free budget spreadsheets online and budgeting apps to help you get started, including a template from the Federal Trade Commission. You can also find budget spreadsheet templates in Canva and Google Sheets, and these are good options as you can transition into customizing your budget spreadsheet at a later date.
Free tools are a great jumping-off point as you navigate a budget spreadsheet. Spend three to four months using one of these templates to get comfortable. Take notes on what features you like and don’t like, what categories you use, and which ones should be added or removed. Then, transition into tailoring a budget spreadsheet to your specific needs.
Outlining a Budget Spreadsheet
The best way to outline your budget spreadsheet is to have dedicated sections for each type of expense and your source (or sources) of income. Consider blocking off each expense for easy reference, with areas for fixed, variable, periodic, and savings.
Seeing your fixed expenses in one section allows you to understand those predictable costs. Variable, periodic, and savings vary and are usually the first expense to adjust if you’re trying to cut back or readjust your spending and goals. Fixed expenses also correspond with a due date and it can be helpful to denote when those bills are due to plan a payment schedule.
In addition to your expenses, have a section in your spreadsheet for income. If you have a fixed income, such as a salary, note the frequency of deposits to align with your fixed expenses. If you work hourly or have an otherwise unfixed income, make estimates on your monthly income. It’s better to figure out the low end of the average to avoid overestimating your income. You want your income to accurately reflect what you will be making to make better budgeting decisions.
Maintaining Consistency
“A budget is a tool, not a fix-all,” Dr. Rasure shares. “It’s only helpful if you’re consistent with it.” Starting anything new will take practice, so don’t get discouraged if you struggle in the beginning. Dr. Rasure explains that budgeting “takes about 60-90 days to become a habit, so don’t give up.”
As you navigate your budget spreadsheet, don’t be afraid to make changes or adjustments along the way. You’ll need to find a process that matches your needs. And, whenever any changes impact your budget, go in to make changes. If you get a new job or a raise, adjust your income and evaluate where that increased money will go. Similarly, if your income decreases, figure out which variable expenses can be reduced or eliminated.
Re-evaluate your budget every couple of months or at least once a year. Remember, this spreadsheet is only for you and if it’s not working, you won’t stay consistent. Think of your budget as a way to find more freedom in your finances and work through your process so it feels empowering rather than restrictive.
Kate Fann is an established SEO content writer with 10 years of freelance writing experience. She focuses on creating engaging SEO content for lifestyle brands, covering home, technology, and entertainment.
