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Maintaining a budget is crucial for a strong financial plan. As you set goals for your spending, saving, investing, and other financial objectives, your budget makes it possible for you to put your plans into action.
There are several different ways you can create a budget, and many budgeting apps have built-in tools to make the process easier. But if you have privacy concerns or you want the ability to customize your budget in a way that works for you, an Excel spreadsheet — or Numbers if you own a MacBook — can be a great choice.
Here’s what you need to know about how to create a budget in Excel and some of the alternatives to consider.
How to create a budget in Excel in 5 steps
Excel can be a great option for new budgeters trying to find an approach that works for them, as well as experienced budgeters who want full control over the process. Here are some steps you can take to get started.
1. Choose your approach
Depending on your budgeting experience and what you want to do, you may decide to build your budget spreadsheet on your own or use an existing Excel budget template.
If you’re new to budgeting, a template can give you a framework to get an idea of what works for you and what doesn’t. It can also provide crucial features, including formulas, that can be helpful for people who don’t have a lot of experience using Excel. We’ve included a template below, but you can always search online for other options.
However, if you’ve been doing this for a while or you know your way around an Excel spreadsheet, you may opt to build your spreadsheet on your own.
2. Review income and expenses
Take a look at your income and expenses over the last few months to get an idea of how much money you take home and where it goes.
Regardless of how complex you want your budget to be, it may be a good idea to categorize all of your expenses as you begin to help you determine how much money you want to allocate toward your financial goals versus your lifestyle.
3. Construct your budget
If you’re not using a template, you’ll want to create your Excel budget based on your preferred approach. If you want a simple approach, for instance, you can create more general budget categories, such as:
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Income
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Necessary expenses
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Debt payments
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Savings and investments
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Charitable contributions
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Discretionary spending
Alternatively, if you want a more detailed view of your spending with a zero-based budgeting approach, you could break those down into further categories. For example, under necessary expenses, you could list out your rent or mortgage payment, insurance premiums, groceries, utilities, childcare, clothing, and medical expenses.
For discretionary spending, you could include streaming subscriptions, other entertainment, dining out, and other lifestyle-related expenses.
Read more: 7 ways to save money on a tight budget
4. Set your spending goals
Each month, you’ll want to evaluate your upcoming expenses and decide how much you want to spend in each category of your budget.
Fixed expenses such as rent, internet, phone bills, and debt payments typically won’t change over time, so you don’t have to update them every month. For other variable expenses, however, you can make adjustments based on planned activities and your financial goals.
As you go through this process each month, don’t forget recurring expenses that don’t get charged every month. For example, you may have an auto insurance premium every six months, and if you forget to account for it in your budget, you may end up overspending. A sinking fund for one-off or infrequent expenses can help you plan for them.
Read more: Fixed vs. variable expenses: Key differences and how to budget for each
5. Determine how strictly you want to stick to your budget
If you’re in a relatively good financial situation, you may have the freedom to give yourself some flexibility with your budgeting goals.
However, if you’re struggling to get by or you have important financial obligations or objectives to satisfy, you may be more willing to align your spending with your monthly goals.
You’ll also need to determine how often you want to update your budget. Because this requires you to log in to your financial accounts to track your expenses, daily updates can be onerous.
However, updating your transactions only once a month can make it hard to evaluate how well you’re sticking to your budget. As a result, once a week is often a good cadence.
Read more: Struggle with budgeting? Following the 50/30/20 rule could be your solution.
6. Reassess your approach
It can take several months for you to find the right balance with your budget, especially if you’re creating one for the first time.
As you track your spending each month, evaluate how effective you are at working toward your goals. If you notice that some of your goals are too rigid or relaxed, make adjustments as you go.
While you’ll be bombarded by specific advice about how you should manage your money, you’ll find that creating a budget is personalized to your needs and priorities can help you minimize unnecessary stress.
Excel budget templates
If you’re thinking about using a template to help you design your budget, here are a few options you can try, including budget templates for specific savings goals:
Free personal budget template
This is a basic template for tracking your personal income and expenses.
Free family/household budget
If you have a large family or multiple members of your household, this budget template can help you budget as a unit.
Free wedding budget template
If you’re saving money for a wedding, this budget template can help you plan for the big day.
Free holiday shopping budget template
The holidays can easily derail your budget if you aren’t careful. Use this budget template to plan for the upcoming holiday season and keep your spending in check.
Read more: What is a holiday savings account?
Excel budget alternatives
If you’re not sold on using Excel to manage your budget, or you simply want other options to compare, here are some to consider:
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Google Sheets: One of the downsides of using Excel is that it lives strictly on your hard drive — cloud access requires a subscription. If you want the flexibility to manage your budget wherever you are, you could consider Google Sheets instead. Google Sheets is also free to use.
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Budgeting apps: Budgeting apps make it easy to manage your money by providing a template, usually with customization options to personalize your budget. Many of them also allow you to import transactions from multiple financial accounts into one place, making it easier to track your spending with little effort. That said, many budgeting apps also charge monthly or annual subscription fees.
The bottom line
Creating an Excel budget can help you better manage your money and accomplish your financial goals. But depending on your experience with the spreadsheet program and your preferences, you may want to consider using a template to help you get a framework to build on.
If you’re not familiar with Excel at all or you simply want to save time, consider a budgeting app that can help by doing some of the legwork associated with budgeting. Regardless of what you decide to do, it’s crucial that you find the best approach for you.