A budget spreadsheet is a tool used to organise individual as well as organisational budgets. This article briefly describes how you can utilise it to manage your finances.
Budgeting is the indispensable function central to any type of financial planning, whether individual or corporate. To attain financial balance and prepare for progressive growth, individuals, groups or organisations have over the last three decades increasingly turned to spreadsheets equipped with budgeting tools to manage their funds. Budget planning using spreadsheets is a simple process that anyone with basic computer knowledge can undertake. A sequential explanation will explain how you can do this with your finances. The process of budget planning First, you must have computer spreadsheet software such as MS Excel or Quicken. Most are compatible with ordinary personal computers and you can buy them at affordable rates in computer stores. Second, once you have installed and learned the basics of the program, open a spreadsheet and create a separate worksheet for each period of focus (it could be weeks, months or years). In the first column of each worksheet, type in and label the expected income for the period. This will define how expenses are controlled.
Third, type in and label all the expected expenditure for the period under focus. The possible expenses you may have include rent, entertainment, food, utilities, and so on. These expenses can be further broken down into major or minor expenditure and periodic or constant expenditure. Fourth, after you have entered all the incomes and expenses in their respective worksheets, use the summation function to add all the amounts listed. This will give you the totals of incomes and expenses. Fifth, create a surplus or deficit column for each period of focus by subtracting the expenses from the income. If the result is negative, you have a deficit and if it positive, you have a surplus. You should repeat this process for every period of focus whether it is weeks, days or months. Sixth, create a worksheet for the totals or summarised expenses, incomes and surpluses that represent every period. Thus, if your period of focus was months, the budgeting software should have a summary worksheet listing all the months of the year with the incomes, expenses and surpluses of each. Seventh, manage finances by keeping track of all income and expenditure to ensure that they conform to your budget. You can do this by increasing the worksheets in the budget file to compare actual incomes and expenses with budgeted incomes and expenses. A regular review of cash flows will help you to avoid debts and spur you into savings and investments.