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FIRST Step to Save Money

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Before you will be able to save money, you must be tacking expenses so that you know where your money is currently going.  The best way to do that is to set up a budget and enter the money that you spend, as you spend it.  Every time.  ALL of the money. No exceptions.  (Do you catch my drift?!)

Before you say that you do not have time to spend on a budget, you should know that my family went on vacation in Hawaii in June 2014 for 10 days and because I have used my budget very carefully for many years and have entered every single expense that I make: every penny, every time, I was able to save enough money to almost pay for the entire Hawaiian vacation with my savings rather than charging most of it.

Although there are many ways to track your money, including a variety of financial software packages, I thought I would share the Excel spreadsheet that I use.  My Excel spreadsheet is almost on auto-pilot, which is the only way that I can track the money I spend and do it regularly. Although I do not use a financial software package, and my Excel spreadsheet is more cumbersome than some ways of tracking my financial expenses, the only way for me to show you how I track my expenses is to show you what I do.

Although it took me about an hour to set up the excel budget the very first time, all I do at the end of the next year is to spend 10-15 minutes to copy the entire document, change the year to the current year, delete all of the entries in a few of the columns, and make a few adjustments to reflect new regular expenses, and my new year’s spreadsheet is ready to use again.

You can use other budget software programs rather than Excel.  My own preference is to use Excel.  Therefore, I thought I would show you the way that I have my budget set up.  I will provide details of how to set up the calculations after each screen shot so that even if you are not familiar with Excel, you should be able to set up a budget of your own. Before I do that, I thought I would show you why a budget is so important.  Below is a recap of all of the months from my 2012 budget.  The red entries showed that I needed to make adjustments in some areas of spending to get rid of all the RED entries.

1 = Projected expenses based on previous year

2 = Actual expenses, which is the total of all months (done with a calculation)

3 = Each month is copied from the total amount of each month (done by “Paste Special”)

 

Track Expenses with a Budget

 

 

Checkbook Register

I have a worksheet page titled “Checkbook” which also includes all cash that I spent.

1 = Cash paid to the Bear Library to pay for an educational class

2 = Optometrist (captured in the TAXES page)

3 = Walgreens is where I get my medications (captured in the TAXES page)

4 = Physical Therapy will also be captured in the TAXES page

5 = Cash spent for an upcoming gift

6 = I transfer savings that I get from cash back and other cash rewards to a special savings account that I have (no fee because I have the minimum daily amount in the account)

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Monthly Entries

  • Column A = Date
  • Column B = Who the entry was paid to
  • Column C = Amount of entry
  • Column D = Code (which code I will use so the spreadsheet automatically extends the amount to the correct column)
  • Columns E through O and also Q = I have a series of codes that represent the expenses such as Dinner Out; Investing; Clothing; Pet Expenses; Food, Rent & Renters’ Insurance; Auto, Gasoline, and Auto Insurance; Health Related; Utilities; Miscellaneous
  • Colum P = describes what the miscellaneous amount was
  • Column R = Date of income (R thru U are illustrated with the number 4)
  • Column S = Where the income came from
  • Column T = Amount of Income
  • Column U = I also have a column set up for when I receive income from cash back and other rewards

Line 26 show the totals for each column (was supposed to be illustrated with the number 5, which is to the far right [right side of the number got cropped off]).  Note, Line 27 is a double check for me.  If Line 26 does not match line 27, I know that I left off a code so that column C did not extend across)

Each row in the column has an IF/THEN clause entered.  Once you get one entire row completed for each of the columns, you can copy the rows all the way down the form. Notice that only the letter changes for each column

CODES (illustrated with 1, 2, 3)

  • D (Dinner Out): =IF($D6=”D“,$C6,” “)
  • I (Investing): =IF($D6=”I“,$C6,” “)
  • C (Clothing): =IF($D6=”c “,$C6,” “) (with “C”, you must add one space after the letter C because otherwise the system will think you mean C for CODE)
  • P (Pet expenses): =IF($D6=”P“,$C6,” “)
  • F (Food): =IF($D6=”F“,$C6,” “)
  • R (Rent & Insurance): =IF($D6=”R “,$C6,” “)
  • A (Auto, Auto Insurance, Gasoline): =IF($D6=”A “,$C6,” “)
  • H (Health Related): =IF($D6=”H “,$C6,” “)
  • U (Utilities): =IF($D6=”U “,$C6,” “)
  • B (Business Expenses): =IF($D6=”B “,$C6,” “)
  • E (Entertainment): =IF($D6=”E “,$C6,” “)
  • M (Miscellaneous): =IF($D6=”M “,$C6,” “)

Lines 29, 30, and 31 are designated with the number 6 and is the difference between expenses and income.  The income should be more than expenses.  If not, adjustments need to be made to correct spending.

The only total that I manually enter is in the cell labeled 7, which is gasoline.  Although gasoline is captured in Auto expenses, but for tax purposes, I need to know the amount of gasoline I spent.

In the RECAP totals, the spreadsheet is set up so the total for each column also copies to each month.  The AMOUNT (column B and labeled with 1) is copied over from LINE 26 of each month.  Each column, labeled with the codes that I use on each month worksheet, copies over from each month. Line 18 below is the total expenses for the full year, which also copies into cell 20B and is also labeled with the number 1.

The same thing is done with REVENUE (right side of the illustration below) and labeled with the number 2, which also copies to cell 21B and also labeled with the number 2.

Obviously income should be more than disbursements for the year.  If I spend more in one year than I make, that means I had to use credit cards, which means I also had to pay interest to be able to use the credit cards.  That is a bad thing.  My goal has always been to spend less than I make so that I can focus on retiring.  There are ways to do that; however, without knowing how much I spend on a regular basis, I cannot make adjustments to expenses.

Recap of Monthly Exenses

The last entry is from another worksheet in my financial document for taxes.  I also use PASTE SPECIAL for the taxes so the amounts automatically copy to this page.  By doing that, I automatically have the tax amounts that I will need to be able to complete my taxes each year.

Link to Taxes Expense Page

It should be noted that I was audited by the IRS one year and because I was able to prove that I track EVERY SINGLE EXPENSE by presenting this spreadsheet, which matched my W2 and other documents I had to provide, the audit went well.

Again, there are financial software programs that make simple work of the above.  I only use Excel because it helps me with my day-to-day issues since I am dyslexic.  Word (or other word processing programs) make easy work of when I transpose letters; however, Word does not show transpositions of numbers.  With Excel, if the difference between two different totals is divisible by 9, that means I transposed a number somewhere.  Also, because I am dyslexic, I have a difficult time reading horizontally without a variety of tools or aids that I have learned to use over the years.  To find where I transposed a number, I simply proofread columns, rather than rows and finding the error is simple.

So, is your burning question “why did you publish this page in Back to Basics rather than Save Money”?  The reason I put this under Back to Basics is because you really do need to get back to basics to be able to get a benchmark from which to work.  If you do not know what you are spending or why or what expenses are “Needs” versus “Wants”, you will find it more difficult to start saving some real money.

Please leave a comment and let me know how you work your own budget.  I would love to share as many ideas as possible so that everyone can be successful.

Jeanne

Thanks for visiting

Traveling Nana

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Updated: August 8, 2015 — 9:36 pm

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