Personal Finance - Budgeting - part 3

Using a Spreadsheet

Not so long ago budgeting was hard work and involved writing everything out on paper and doing difficult math in your head.

These days it's much easier and you probably have the ideal tool, a spreadsheet such as Excel, already on your computer.

A budget spreadsheet is simple to set up as shown in the picture, and allows you to quickly see how much you have coming in and going out, as well as showing you instantly the effects of any changes.

The example shown only uses 3 simple formulae, ie:

The total income is


Total spending is


And the difference between the two is


Download sample spreadsheet budget_eg.xlsx

What to do with the result

Depending on the result of your calculations you may be feeling happy (if you have more income than spending), or sad (if you spend more than your income).

If you find you have more income than you’re spending - congratulations! You're now in the fortunate position where you can decide what to do with your extra money.

But even in the sad case you can still allow yourself a little smile because:

  1. at least you know that you’re spending more than your income - so you can do something about it, and
  2. just by doing these calculations, you’ve almost certainly found some ways to save money already, even if it’s just going without a morning coffee!

If you are spending more than your income it means either that your savings will be decreasing, or (more worrying) that your debt is increasing.

What can you do about it?

1) You can try to increase your income, eg asking for a raise, looking for a better job, or working more hours - either in your current job or by taking an additional job.


2) You can look for ways to decrease your spending. Identify the things you spend money on that are least important to you and cut back or eliminate them. If you have insurance or other bills where there may be a cheaper alternative - find out. Internet comparison sites are a great way to quickly check you’re getting the best deal. If you’d rather stick with a current provider, you can still give them a call and see if they can give you a discount.

Jam Jars and Envelopes

A while back many people used to keep money for different things in jam jars or envelopes. This seems a bit old-fashioned these days, but it worked! You couldn’t easily overspend on anything, and if you did you certainly knew about it because the jam jar would be empty and you’d have to borrow from another one.

These days you don’t need to keep your money in jam jars and envelopes. It’s probably safer and you can earn interest by keeping it in the bank. But the same principle can still be applied by allocating your money to different purposes and keeping track in a spreadsheet.

But if spreadsheets aren’t your thing, jam jars and envelopes still work just as well as in grandma’s day.

Ships, Planes and Budgeting

Budgeting is a bit like steering a ship or flying a plane.

It isn’t something you just do once and then forget about.

It’s something you need to keep a frequent check on, and if you’re going off course make the necessary adjustments.

And just like steering a ship or flying a plane the more often you check your course, the easier it is to make corrections.