Having control over your finances is very important if you want to understand your relationship with money. This also includes monitoring your income and expenses. Having a financial spreadsheet is a crucial step in all of this. Here’s why!
Establishing a good relationship with money is integral to living a comfortable life.
By learning to differentiate between necessary and superfluous expenses, you can adjust your daily spending and make achieving those dreams much easier.
This is why we’ll help you build and make good use of your financial spreadsheet. With these tips, you may even save enough to invest a portion of your money and put it to work.
Do you know what a financial spreadsheet is?
The financial spreadsheet is incredibly useful for anyone who wants more control over their resources.
It is the digital version of the earnings and expenses notebook, albeit much more practical since it comes with all the formulas pre-entered into the cells. On top of this, excel spreadsheets have hundreds of formatting options, and you can modify the spreadsheet to your liking.
In order for this financial spreadsheet to be efficient, you need to register your money transactions regularly. Optimally, you should do this just as you make them, as it’ll make it harder to forget.
This way, you’ll be able to keep track of all the revenue, income, and expenses you have every month. This will also include day-to-day and fixed expenses, as well as those that pop up from time to time, expected or not.
Why is using a financial spreadsheet important?
A financial spreadsheet allows you to have greater control of your money by monitoring income and expenses. That way, you can see if you’ve reached a spending limit, while also analyzing your financial health and keeping track of where all your money is going.
This spending control will also allow you to project your future, creating strategies to save and make more at the end of the month.
How to set up a financial spreadsheet: step by step
Now that you know what a financial spreadsheet is and the advantages of using it, let’s go over some step-by-step instructions on how to set up yours.
1st step: make use of the tools at your disposal
These days, there are several digital tools that contribute to financial control, from text editing programs such as Word, Google Docs, and notepad, to Excel spreadsheets, Google Sheets, or other applications for this purpose. What makes it easier is that all of them can be used both on the computer as well as on the move.
Most experts will recommend using electronic spreadsheets, as they can be formatted graphically, in order to better organize the information. Additionally, you can use formulas, which do all the complex calculations for you the moment you enter the data.
2nd step: Income
To facilitate the visualization of information, it is important that the data be divided into categories and subcategories. The first one should be income sources. Here, you’re supposed to enter every source of income in a separate row, such as salary, Christmas bonus, overtime, earnings from rents and pensions, and others. The last row of the column is dedicated to the sum of these values.
Next, you’ll want to add 12 columns to the right of Revenue Sources, where the values will be entered for every month of the year. Apply the sum formula to each one, and you’ll obtain the total value for each one of them.
3rd step: expenses
Now that you’ve set up the income section, it’s time to deal with the expense information. Generally, this category is divided into two subcategories: fixed costs and variable costs. You can always choose to include a third one, for unforeseen expenses.
Fixed costs are those that are repeated every month and with the same values, such as rent or financing installment, health plan, IPTU, and IPVA, among others.
Variable costs are those that repeat regularly as well, but the amounts vary from month to month. These are the costs you can try to cut.
Variable costs are water and energy bills, supermarkets, public transport, medication, and leisure, among others.
Naturally, we’re not able to predict everything that will generate expenses throughout the month, and numerous things can pop up from time to time. This can be anything, starting with a flat tire or even a plumbing issue at your house. This is where the importance of the subcategory of unforeseen expenses in the financial spreadsheet comes in.
As with the income category, add columns to enter data over the 12 months. Do not forget the line reserved for total expenses and use the sum formula.
4th step: result
The last category should be the balance of financial transactions for each month. A single line where you’ll apply a formula that subtracts the total expenses from the total income. That way, you’ll know if your monthly balance is positive or negative and what you can do to improve it.
You don’t need to make a financial spreadsheet exactly the way we describe it here. By understanding how expense control mechanics work, you can adapt according to what you consider simpler for everyday life.
Free financial spreadsheet templates
If you are not very familiar with spreadsheets, or just prefer something that’s ready from the get-go, there are several free templates available on the internet. Here are some pointers:
- Family budget worksheet, by Mobilis – divided into the categories “income”, “savings” and “expenses” with several subcategories, you will have a monthly summary of income and expenses right at the top of the worksheet;
- Financial Control Excel Spreadsheet, from BM&F Bovespa – has the categories “income”, “investments” and “expenses”, and provides a summary of financial information at the end of the spreadsheet;
- Personal monthly budget worksheet and Personal Annual Budget worksheet, both from Microsoft – both worksheets allow you to project income and expenses and compare it with the real scenario. They are complete tools but offer little customization to the user.
You can download the available options from the links and compare them to choose the financial spreadsheet template that best suits your needs.
What to do with the money at the end of the month?
Certainly, you have plans that depend on how much money you have at the ready, whether it’s buying a property, taking a dream trip, or saving up for an early retirement.
The best way to achieve these dreams is by using a financial spreadsheet to control income and expenses, creating strategies that will leave you with a positive monthly balance every time. Thus, you can invest, which will allow you to put all this money to good use.