Create a personal budget in excel in 4 easy steps

Create a personal budget in Excel / Productivity in 4 easy steps

Years ago, my wife and I were saddled with so much debt that we felt it would take us the rest of our lives, or at least the next sixty years, to pay it all off. There came a moment when we realized we either had to come up with a personal budget that could outsmart the system, or it would keep us enslaved for our entire adult lives.

That's when I sat down with a blank Microsoft Excel spreadsheet and started playing around, using different techniques to cut our budget down to the bone. My goal was to create a debt plan. 3 Reasons Why the Debt Snowball Beats the Debt Avalanche 3 Reasons Why the Debt Snowball Beats the Debt Avalanche The debt snowball and the debt avalanche are both good ways to pay off debt, but these three reasons will show you that the snowball is usually the better choice. Read more, it wouldn't take decades to eliminate our debt, but we also wouldn't force ourselves to eat macaroni and cheese until we retire. In the end, I was able to eliminate all of our credit card debt in just five years. We even ended up with enough credit to get a low mortgage to buy our first home.

Today I'm going to share a few of the nifty spreadsheet techniques I've used to create a usable (and useful) budget. I'll also share a technique you can use to pay down your debt. Here's how to visualize your debt and stay motivated as you pay it off. Here's how to visualize your debt and stay motivated as you pay it off. It's hard to stay motivated to pay off your debt , but visualization can make the process easier. Read more in a fraction of the time and use the exact same payments you make today. It's a trick that I've seen a lot of people try to sell elsewhere on the internet – I'll share it here with MakeUseOf readers for free.

Step 1: Structure a personal budget spreadsheet that won't drive you crazy

Anyone who has tried to create a personal budget knows the basics. You need to log all your bills and all your income. Your bottom line is how much you have left for fun, or how much fun you have to cut back on your lifestyle before you go bankrupt. 3 Tips to Defeat Debt Collectors When You Go Bankrupt (or Late with Bills) Debt Collectors (or Late with Bills) Serious financial problems are among the most stressful situations a person can face. Follow these tips to take the stress out of technology. Continue Reading . This sounds simple, but when you start entering all the details into a spreadsheet, things get very messy very quickly. Many people give up after the first try.

The basic layout is simple enough. List your bills in the first column on the left, and in the next columns, indicate the total amount you owe, monthly payments required, and the date the bill is usually due. These four columns are really all you need to create a budget.

Here, I've taken an extra step and added a column for each month for easy tracking of expenses. 6 Ways to Track Your Monthly Spending (and Stick to Your Budget) 6 Ways to Track Your Monthly Spending (and Stick to Your Budget) Tracking your spending is the first and most important step to saving money. Here are six ways to track your money. Continue reading .

However, once you get a large number of columns and rows, the screen starts to scroll, and you can't always see the bills on the left or the header at the top. The quick and easy way to fix this problem is to use Freeze slices feature.

First, select the box where the cross in the upper left corner represents the row and column you want to use Don't scroll If you use the scroll bars on the spreadsheet. Select View> Freeze Window.

Now, when you scroll up or down (as shown here), the header and left column remain static, so you always know what value you're referring to. This is a very useful feature, and since I have a very poor short-term memory, it saved me a lot of frustration since I usually had to keep scrolling back to check which bill I had selected.

If you're new to Excel and need tips on getting started with spreadsheets, check out Excel Courses for Beginners. Learn Excel starting today with these 5 excellent Udemy courses to help you earn more at your job. If you don't know where to start, take these five excellent Microsoft Excel courses on through to the end. Continue reading .

Step 2: Create an organized budget using shading

I remember searching for a free spreadsheet to use. Save money and set budgets with 5 apps, sites and free ebooks Saving money and setting budgets with 5 apps, sites and free ebooks The ability to manage your finances and save money is a critical life skill . Have you mastered it yet? Follow the right instructions and enlist the help of these apps. Read more then and find all these templates filled with data that just made my head hurt. If the main sections of your budget are not clearly separated, it is difficult to categorize the area you are interested in. The best way to organize a budget spreadsheet is to shade each summary section between the main groups.

As you can see here, the first section of the budget relates to bills, including appliances and fixed bills, as well as another section dedicated solely to credit cards. At the bottom of this section, the fixed bill total is highlighted with light green shading so it is clear and easy to find.

As you can see, after shading rows, the entire spreadsheet becomes much clearer and easier to follow.

The Fill tool is located in the Excel menu bar under the main menu and appears as if a color could flip with color pouring out. Simply highlight the entire row (click the numbered gray cell on the left) and then click Fill button and choose the color you want to use.

Step 3: Use Excel formulas to project your credit card balances into the future

Now that you can create a personal budget that is well organized and structured and can be tracked in a very simple way, the next step is attacking the nagging credit card debt that has plagued you for years. In the following examples, I used the same formatting techniques to create a list of credit card balances and monthly payments.

Set up your debt log the same way – divide and freeze the windows. However, this list is displayed on the left side of the page each month. Your credit card will also be credited. Here's how to save thousands with a credit card balance transfer. How to save thousands with a credit card balance transfer A credit card balance transfer can save you thousands of dollars if you do it right. Check out our advice and recommendations on credit cards. Read more (and make monthly payments) to the right. After entering your current account balance in the top cell (in this case, for example, Capital One is 3.000 dollars), enter a formula in the next cell that multiplies that balance by your card's interest rate and divides by twelve. This is your estimated monthly interest.

Then subtract your monthly payment from your account balance and add the interest you just calculated. Once you've calculated the first cell correctly, you can copy the formula for each month below it by clicking on the little box at the bottom right of the cell you just calculated and dragging it down as far as you like. A new calculated balance is created for each month based on the previous month's balance.

If you do this projection, you will eventually find the place where the balance is paid in full. As you can see from my own calculations, if I maintain a $250 payment each month until it pays off, it will have to take me until July 2012 to pay off the entire Advanta credit card balance.

Step 4: Recalculate interest-based payments and eliminate your debt

As I played around with this type of spreadsheet, I discovered the very simple, common sense solution that many scammers charge people for. Instead of maintaining constant payments on each of your credit cards until they pay off, pay off the minimum balance on all credit cards and divert the entire stream of "debt payment" money toward the credit card with the highest interest. Here's how it works.

This is why I love Excel. With the ability to automatically fill out monthly balance calculations, I tested different scenarios to pay off debt faster. Instead of paying $100 for Capital One and paying until 2025 to pay off that balance, I paid an extra $200 and paid it off by February 2022. Then I take the $300 and add it to my other credit cards.

If you have extra credit card balances, just turn to "snowballing" the payment and elimination of your debt in months instead of years. In Excel, you can display this concept in a very good graphical form by using the auto-fill formula feature.

Use Excel for budgeting

The power of Excel for budgeting and debt planning of this nature cannot be underestimated. And even if you don't use Excel, you should at least familiarize yourself with different budgets. 15 Cool Tools for Easy Tracking of Expenses and Budgeting 15 Cool Tools for Easy Tracking of Expenses and Budgeting Tracking your expenses and budgeting are two crucial factors for a healthy financial situation. These 15 apps make it easy to do both. Read more and debt planning tools How to see if you're in financial trouble and what to do about it How to see if you're in financial trouble and what to do about it Read more about it. Make the decision to try a few, and commit to settling down regularly and working on them a little at a time. It may take a while at first, but in the long run you will be very happy.

Use Excel or other spreadsheets to create a personal budget or plan your family bills? Share your own tips and resources in the comments below.

Image credit: AndreyPopov / Depositphotos

Learn more about: budget, credit card, debt, microsoft excel, microsoft office tips, money management, saving money, spreadsheet, tax software.

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