Managing Home Finances through Excel

Planning your home finances is an important task to accomplish, but it does not have to be a tiring affair. One way to make it easier is to understand how to manage your home finances in an Excel file. Among the different methods of managing your finances, the most popular is perhaps using online spreadsheets or Microsoft Excel.

Your Budget in a Spreadsheet

Your budget is a vital factor for managing your finances: it’ll show how much money comes in and how much of it is being spent. By checking your cash flow, you’ll see where every cent goes. You’ll allocate your resources better, and you’ll better maximize the amounts in your paycheck.

Tracking your expenses and planning your budget will also help you set your financial goals. Doing so will give you a clear view of how you stand, plus help you see what you need to improve on.

Excel files can store large amounts of data, and its specialty is data analysis and calculation. Data gathered can even be presented in a simple yet professional-looking table. Using spreadsheets help organize the information you gather, plus it easily does the math for you.

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The Step-by-Step Process

So how do you do it? Easy.

Here’s a step-by-step guide on how to manage your home finances in an Excel file.

• Determine your goal.
Are you looking for immediate budget planning, or are you aiming to see ways on how to arrange long-term goals for your money?
Will your goal prioritize your necessities, or will it give way to your luxuries? Necessities include but not limited to food, utilities, mortgage or rent, car payments and household supplies. Luxuries include family vacations, travel plans or self-indulgences e.g. massage.
Being clear about your goal helps you manage your money better.

• Create your template.
You can set up Excel to have a template that you can reuse. You can start with a blank spreadsheet. You’ll see tabs at the bottom left for setting up multiple categories, or divide your spreadsheet into different areas.

Categories can include cash flow, income source, bills, savings, and totals.

Creating the template will be easier if you have determined both your income and your expenses. An estimate will do if you’re not sure of the actual amounts. Add them all up to arrive at the total amount.

There are two kinds of expenses: committed and discretionary. Committed expenses are usually your necessities; they can either be fixed or variable – the former having a fixed amount, while the latter does not. Discretionary expenses are optional e.g. recreation and entertainment.

• Set the formulas.
Managing your expenses will be easier with formulas. You can use formulas that are either predetermined or self-made.
Typical math formulas have the equal sign towards the end of the math sentence; Excel formulas are written in reverse. There are formulas for all four mathematical operations (addition, subtraction, multiplication, and division) as well as complex formulas for tax and interest.

• Fill in the information.
Now that the templates are set up as well as the formulas, you can now add the information i.e. labels, categories, and other items.
There are Excel features that will greatly help your document: font will help you set up highlighting, letter formatting, colors, and size; alignment helps you with text orientation, merging of cells and wrapping text functions; numbers help number formatting as well as adding currency symbols.

Learning From the Numbers

Now that you’ve got everything set up, the next and final step should be about filling in the information as days pass, and learning from the numbers. Are you able to manage your money wisely? Is your income enough for all your expenses and still allows you to save?

It’s not enough that you have everything recorded – your excel file should also be able to help you understand and improve your financial status.

Brian King