How to Make a Budget, Using the Ultimate Spreadsheet
January 8, 2020
By Joel Christophersen
V.P of Retail Banking
Still racking your brain for the perfect New Year’s resolution? How about getting more financially fit!? Just like diet and exercise can help you stay physically fit, there’s a simple, not-so-secret key to getting in better financial shape: a budget.
Now if the word “budget” sounds tedious (or terrifying), take note — it’s a lot easier than you think, especially with the right tools. In this article, we'll take you through a step-by-step guide on how to create a monthly budget.
Free Excel Budget Template
Now, you might be asking yourself, “How do I make a monthly budget spreadsheet?” You'll be happy to know, we've already created a template to help you get started! Download our free monthly budget example by clicking the one of the buttons below.
Download for Excel (800 KB) Download PDF (143 KB)
A Step-by-Step Guide to Creating a Monthly Budget
Ready to get started? Follow these steps to create your monthly household budget planner:
STEP 1: Note your “real” (take-home) income.
When figuring your income, only count the amount that you actually see deposited into your bank account every month from your paycheck. This won’t include taxes, social security, your 401(k) contributions or insurance premiums, because these items are usually taken out before your paycheck hits your bank account.
If you get paid twice per month, be sure to add those figures together for your total. Once you have your total, place it in the "projected monthly income" box. Also be sure to add other sources of money you expect to get each month (a spouse's paycheck, for example).
HINT: You can generate a little extra income each month by having some sort of Performance Checking, which usually pays higher interest than a normal free checking account.
STEP 2: Come up with projected monthly expenses – “fixed” and “variable.”
Look back at past months to come up with all of your usual expenses, and put these amounts in your budget spreadsheet as “projected costs.” Every projected cost will be one of two types:
This is any cost that won’t regularly change from month-to-month, including rent/mortgage, car/student loan payments, and insurance premiums. Utilities (sewer, electric, garbage, etc.) also count – but they’re a little trickier. Research what you’ve spent on your utilities over the past year, divide by 12 and use the monthly average as your projected cost.
These are expenses that change every month, and include things like groceries, gas, entertainment and clothing. You will need to come up with an ideal amount (projected cost) you’d like to spend each month on these categories.
HINT: After coming up with all your expenses, make sure your projected costs don’t exceed your take-home income. This is called going over budget! If you need more help, use our monthly budget calculator to get a quick idea of where your costs should be.
STEP 3: Track actual monthly expenses and income.
Pick a certain day each month to sit down and add up all of your real expenses from the past 30 days. Your bank and credit card statements are a good place to start! Picking the same day each month — the 1st, or the 21st, for example — can help keep you in the good habit of monthly budgeting.
Use budget categories
Make sure each expense belongs to a specific category on your monthly budget template. For example, gas station expenses would be considered “Fuel,” while a fast food receipt belongs under “Dining Out.” Once you have a monthly total figured for each category, place the number under the “Actual Cost” header in your budget spreadsheet.
Once you enter in the actual cost into your spreadsheet, you'll be able to see the “Difference” between your projected and real expense in each budget category. Hopefully, you're under budget!
HINT: Enroll in online banking or download your bank's mobile app for the most convenient way to track your income and expenses.
STEP 4: Determine if you are over or under budget.
This is it – the moment of truth! Add up your real costs, and compare them to your projected costs (this should happen automatically if you use our budget spreadsheet at the top of this page). The goal is to be “under budget,” by keeping your real costs less than your projected ones when you combine all of your budget categories.
If you are over budget:
Take a deep breath – then make a change! First, divide your variable monthly expenses into “wants” and “needs.” Consider eliminating purchases that are just “wants.” Maybe you can bring your own lunch to work, or make your own coffee in the morning instead of ordering that latte at the drive-thru.
If you’re still over budget, think about ways to make your fixed expenses less costly. That might mean moving into a place with cheaper rent, or sacrificing your satellite dish for basic cable or pulling the plug altogether.
If you are under budget:
It’s time to celebrate! And, to put your leftover money toward your next step …
STEP 5: Set savings goals. Put them in writing.
Make a list of all the financial goals you’d like to reach. Start with short-term goals that you can reach in the next three to six months — things like building an emergency fund, paying down credit card debt or saving for a vacation. Then, include long-term goals like saving for your child’s education, putting a down payment on a home, or building your retirement fund. Any time you are under budget each month, take that money and apply it toward your savings goals.
HINT: If you need help, make an appointment today with an SNB professional who can help you set and your financial goals.