create a budget from scratch

I don’t know about you but I have a thing for Excel spreadsheets. I love the formulas and making it pretty and playing with numbers. All of it. Love it. So I created a budget template (this is what I use) to help anyone get started with budgeting. Link is here, just File > Make a Copy, and it’s yours!

I’ll go over how to use it effectively below:

go through all your statements

Look through all your statements from the past month (if you’re in the middle of the month, look at what you spent last month not the last 30 days). Document what each expense is in column A, the due date in Column C, and what you currently pay each month in Column D.

Be sure to create a line item for more regular expenses such as food/groceries, gas and that nail salon you might go to monthly. Input how much you actually spend on these things.

if you’ve been saving at all, create a line item for your savings, and what you’ve been able to put away in the last month.

calculate your monthly income

In column L under income, input how much money you receive each month from your paycheck (total all your paychecks from the month). Do you do anything on the side? Add it here too. It should total up below. Easy peasy.

compare and cut out

Now comes the harder part. Compare the total amount of expenses to your income. Are you over? Under? Or breaking even?

Take a quick look and see if there are any unnecessary subscriptions you can go without. Do you REALLY need that magazine subscription? Maybe you realized you’ve been paying for an app you haven’t used in months. In column E, make notes of what expenses you are canceling, and go ahead and cancel them now.

prioritizing debt

There’s two strategies to pay off debt. I’m not convinced one is significantly better than the other, I think it’s really based on preference and what’s going to make you feel good about paying your debt off.

The first strategy is to pay off the debt account that has the lowest balance first. The second, and what I do, is pay the debt account with the highest interest rate first. Whichever way you choose, I’d still suggest inputting each debt account’s interest rate in column F.

The important thing to note is that you are making the minimum payment on all your debt accounts EXCEPT the account you want to pay off first. The goal is to put a little extra money towards this single account each month until it is paid off.

create your new budget

The last step is tackling column G and B.

In column G, input every fixed expense. This would be rent, utilities, Netflix, etc.

Next, input the minimum payment amount to all your debt accounts including the one you are planning to overpay (we’ll fix it in a minute).

Now take a look at your gas, food/groceries, nails, etc. come up with a realistic amount of money you would spend each month. For example, if you spent $57 on gas last month, maybe make your budget $65 per month. Or if you’ve noticed you’ve been eating out a lot, make a commitment to eat more at home and maybe budget $25 less than you spent last month.

Now take a look at what you have left: savings, spending and that debt account you would like to pay off first. This is where I like to play with the numbers. Think about how much money you would be okay with spending per week (column M). As you change your amounts in your savings and debt account, this number will change too.

The goal is to save a little, spend a little, and pay off some debt a little.

The very last thing to do, that will help you immensely, is documenting in column B which expenses are autopay and which ones you need to do manually. This will help you not to forget, but also set up some autopays for accounts that have it as an option. Autopay is my hero.

Once you have that down, guess what! You got yourself a budget! I suggest creating a new budget each month (copy and paste spreadsheet into a new sheet for the new month) and reflect on your spending habits. Remember, this has to work for you so don’t go setting unrealistic goals for yourself.

Hope you enjoyed this post and the budget template. I’d love to hear if you tried the template or implemented anything from this article.

xx, sioban

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