4 Reasons to Use Excel for Your Monthly Budgeting
The key thing about budgeting is that it allows you to distribute funds more consciously. Knowing what you spend your money on, you can determine a financial vector. How? Budgeting is great at showing where your approach to finance leads – whether to prosperity or bankruptcy.
After a couple of months of managing your money, you may eliminate unnecessary expenses and find out where to invest in (health or sports, for instance). Controlling your finances is very easy in today's world - all you need to do is open Excel, and here are 4 reasons why it works.
Excel Is Great For Beginners
If you're new to budgeting, try keeping it in a simple Excel spreadsheet instead of turning to some complicated premium tools. The benefits are obvious - you don't spend money on programs that are difficult for you to figure out and try your hand at controlling finances.
It is better to start drawing up a budget in a simple table where everything is clear to you. Over time, you can complicate and supplement it. One sheet in Excel stands for one month. The main principle of drawing up a financial plan is to break down expenses and incomes into different categories and keep records for each of them.
It is better to start with a small number of categories (10 will be enough). Here are some common monthly expenses:
- transportation/ car payment;
- groceries and other essentials;
- utility bills;
- clothing, jewelry, etc.;
- gym and other club memberships;
- Internet and cell phone;
- dining out;
Usually, students start planning their budgets when they get their first job. It often takes up all their time, so there is practically no energy left to finish college assignments. Luckily, it's easy to find an essay writing service and outsource the paper to talented professionals. Turning to experienced specialists is surely one of the best ways to manage it all in these stressful times.
Excel Is Universal
There are hundreds of financial planners online, however, they are rather limited when it comes to functionality. On the contrary, Excel is universal as it has 50+ financial formulas for all occasions. It's useful to know three of them for budget control and planning:
- the PMT function - one of the most relevant functions; using it, you can calculate the payment amount for a loan with annuity payments (the loan paid in equal installments);
- the rate function calculates the interest rate on a loan or investment based on the future value;
- the effect function returns the actual annual interest rate when you specify the nominal annual interest rate and the number of compounding periods per year.
Also, Excel is a cross-platform since it is recognized by almost all office programs.
Templates Are Available For Download
Excel templates have become essential helpers when balancing expenses along with their control. The spreadsheets and inserted functions solve any problems you might have. For example, Monthly Household Budget Worksheet includes
- a separate sheet for each month;
- sections for expenses and income, as well as their overall balance;
- a graph that shows the presence or absence of economic growth at the end of the year;
- a summary of the year – a comparison table where we observe the evolution of income and expenses by month.
You just need to fill in your data, and results will appear automatically.
Personal Monthly Budget Spreadsheet is also worth downloading since it compares project and actual revenues, as well as forecasts and actual expenditures.
Money in Excel Is a Brand New Tool
In the summer of 2020, Microsoft added the Money function to Excel. To use the service, you need to provide it with access to your bank accounts and cards. The transaction data will be automatically imported into the Excel spreadsheet the next day.
Microsoft uses the Plaid platform that gains access to transaction history, account balances, and personal information of their owners. All expenses are displayed in an Excel spreadsheet and divided into categories such as food, household, rent, and others. You can also create them on your own.
Excel Money generates monthly reports in the form of graphs and diagrams. With their help, users can compare their expenses – besides, the service will warn you if the expenditures are significantly higher than before.
Wrapping It Up
What are other reasons for tracking your spending? First and foremost, it’s about a basic sense of security and confidence - you won’t spontaneously discover that half of your salary is spent unreasonably. Budgeting is especially important in our rapidly changing world as a financial cushion comes in handy in case of a layoff or crisis.
Plus, you will avoid debt and loans since your expenses will be calculated in advance. The budget makes us disciplined.
Besides, it will be easier for you to plan large expenses. In case you want to buy a car or go on a far journey, it is simpler to realize such a plan with a budget – just analyze in which month you will have the sum you need.