Managing a Budget
Budget management is at the core of maintaining stable and lasting financial security. Failure to
track spending and monitor monthly expenses is a common reason individuals find themselves
in debt. Taking the time monthly to track spending and income is a simple yet powerful tool in
achieving your financial goals. In this article I will go over some background and lay down the
basics. I will also provide a starter Microsoft Excel spreadsheet to help calculate your budget
with minimal effort.
We’re in the Future
Years ago we had to “balance our checkbooks“. This entailed writing down the balance in our
checking accounts and subtracting the amounts of the checks we wrote. Back then, people
would bounce checks accidentally more often due to poorly managed checkbooks. Today we do
things entirely differently. We have debit cards, online banking and mobile apps that do this
work for us. So, why is taking the time to perform a budget important?
No matter what you are dealing with it is always helpful to have all the information laid out in
front of you. In the case of a monthly budget, we are looking at past, present and future. More
specifically: What was my spending like last month? What did I do differently this month? How
can I improve next month?
Back to Basics
Open up the Excel sheet found here. On this very simple budget calculator you will find two
large columns. In the left side column you will list your income sources and their monthly totals.
In the right side column you will list your monthly expenses and their totals. I have included
some common items in both of these lists, but they can be changed freely. All the amounts will
add up regardless. Every item counts. Don’t leave out the weekly trips to Dairy Queen or the
movies you commonly rent on a whim every weekend.
Once this information is filled out completely your totals will automatically be calculated. In
addition to these totals, the box beneath the two columns displays how much money is left over
after expenses. If this number is positive, you’re in good shape. If you find yourself in the
negative, you need to take a look at your expenses and figure out if anything can be adjusted
Lastly, I have included a field to adjust possible savings. I have defaulted this field to 20%, but it
can be changed as you wish. If you find yourself with a nice bit of money in the remainder field,
and you are not currently saving, use this to create a plan for yourself. Make it a point to save a
specific amount of money every month, or every paycheck. Find yourself a savings account or
IRA and put that money away. If it is not imperative to have that money with you day-to-day, it
should not be with you. At the very least, open a savings account, keep the extra money there
and do not touch it. Keep that money for your emergency fund or retirement. You will be more
compelled to spend that money frivolously if it is co-mingling with your lunch money.
Be the Best “You”
This spreadsheet will give you a clear picture of your financial potential. If you’re in the red, don’t
sweat it. Cut frivolous spending and keep your purchases regimented. You should always be
thinking about how you can be making more money as well. Spend within your limits, never limit
your potential income. If you have a bit of money left at the end of the month, consider ways to
save for your future. If you haven’t already, open a savings account. Whatever bank you use will
have the resource you need to plan for the future.
Saving secures your future, but will not make you rich. Remember, the only way to get rich is to
make more money. Skipping the weekly night out is essential for those who are struggling to
pay their bills, but will not make a stable wallet wealthier. Saving money shouldn’t have to affect
your lifestyle. Make good decisions and exercise your budget monthly.