7 Ways Creating a Budget in Excel Can Help You Organize Your Finances
It seems like everyone has a friend, you know, the one who can seemingly work magic in Excel. Microsoft's spreadsheet software is one of the simplest but most powerful applications out there, and number-crunching is its forte.
There are alternative budgeting apps available, but creating a budget in Excel lets you personalize your financial record-keeping to a degree that isn't always possible with a ready-made template. If you want total control of your budget's layout and appearance, or if you want the option to make detailed adjustments to formulas, Excel has a lot more capabilities than you may realize. Here are just a few of the program's functionalities that can help you keep your finances organized.
1 Track expenses
Use Insert Rows to add rows for different spending categories, like rent, car payments and groceries. Add columns for projected and actual expenses in each category. Then, you can use =SUM() to add up numbers within these columns. This is an easy way to tally a specific month's expenses, income streams, or spending in a single category across multiple months.
2 Organize monthly budgets in the same workbook
Using the tabs at the bottom of the page, create a new sheet for each month of the year. You might want to add a summary sheet for charts and trends. If you're performing a calculation in one sheet and you'd like to refer to a cell from another sheet, just remember to include the sheet name and an exclamation mark. For example, you might write February!B7 to indicate a cell from February's budget.
3 Use a minus sign to calculate the difference between cells
Check that you're keeping expenses below income, or that a spending category stays within a percentage of your income. You can also calculate the difference between actual and projected expenses, and select Format Cells from the drop-down menu to format negative numbers in red.
4 Use a line chart or area chart to visualize changes in your finances
Under the Insert tab, select a line chart, and graph how your income or spending in a category has fluctuated. Alternatively, choose an area chart, and see how your spending or saving has changed as a portion of your income.
5 Use a pie chart to see how your spending categories compare
Create a pie chart under Insert, and visualize how much of your spending goes to entertainment, healthcare or rent. Another option is to make your total income the entire pie and to divide it up into spending, savings, investment and paying down debt.
6 Calculate your monthly average spending
Use =AVERAGE() to add up the sums of your spending in each category and see what your month-to-month average is. This is helpful for planning for the future, when you want to know how much you typically spent, not just how much you spent last month. If your income goes up and down because of freelance projects, this formula can help you find your average monthly income, average weekly income in the summer or average earnings from a specific gig.
7 Color-code cells
Use fill colors to highlight categories you'd like to pay particular attention to, or alert yourself to bills that haven't been paid yet. Click on the Fill Colors button at the top—the one that looks like a paint bucket—and choose corresponding colors from one of the available themes. You can also choose More Colors for a wider selection.
Adapt your spreadsheets to your needs
One of the great things about creating a budget in Excel is that you can change the formulas you have set up as your needs change. Keep your budget up to date by regularly recording your spending in the appropriate cells. Feel free to edit your spreadsheets to add some new categories, or remove old categories that are no longer relevant.
A few financial insights for your life
This information is provided for educational purposes only and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. First Citizens Bank (or its affiliates) neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.