Warning: This is not something that took an easy 10 minutes to make and complete. I did a lot of digging, research, etc. to come up and gather the figures that we used and recorded for the expenses that we have. And as you'll see towards the bottom of this post, you'll want to constantly update the figures and rows in your spreadsheet to keep up with your current situations and plans for purchases - as we all know that those constantly change.
We've always had a great handle (thankfully) on our finances and keep a good record keeping system to make sure we're staying on top of our bills, with the intention to put as much as we can into our savings and our retirement accounts/future children's college fund accounts, for much longer down the road. I wanted to share something that's so easy to create, and that makes such a huge difference and was (and continues to be) a great asset for our financial planning.
With plans for home improvements, future large purchases and future investment options that we are looking into - we want to always make sure that we know exactly what our financial situation is at any given moment. It helps tremendously for planning (something that all of you know I'm OCD about)!
I created this spreadsheet to track all of our finances and will give you a brief breakdown. Granted, if you could actually see the many rows we have, itemized calculations, formulas, etc. on our detailed spreadsheet, you'd see exactly how much every penny adds up, and how the little things that you don't consider while you're spending, make a huge difference in the end. You'd think I was crazy after seeing how detailed and specific ours is, but I'm thankful for the organization and the system that works so well for us - which is why I'm sharing, and hope that it will help you get a handle/snapshot on your own individual finances - you can never be too careful or educated enough! (And it's never too late to start planning/tracking your finances - the sooner, the better!) No matter what stage of life you are in, it can only be beneficial - why not give it a try? :)
Below is the basic spreadsheet that I made and use:
First Section - Monthly Bills
Pretty self explanatory - but here, I made a list of all of our monthly bills. I looked at our past few months of bills to come up with an average monthly total for each bill. Some of the bills that I included here were things like our Mortgage, HOA fee, electric, water/sewer, cell phone bill, internet/cable, car payment, gym memberships, etc. Anything that we are financially responsible for and are billed for on a monthly basis, I put in this section. I also made an estimate for how much we spend per month for groceries, and put that figure in this section as well.
We'll come back to the last two lines in this section - "Average Annual Bill Costs & Average Annual Miscellaneous Costs".
Second Section - Annual Bills
Here, I listed any of our bills that we are billed for on a yearly basis - i.e. Car Insurance, private Life Insurance, etc. Here, I also factored in and estimated yearly costs for things like Tucker's vet bills, Tucker's food, annual costs for haircuts, transportation fees, etc.
For example, Eric usually gets haircuts twice a month at about $15/hair cut (for things like haircuts in these figures, make sure that your total includes your tip). If you can break down how many times a month you pay something, you'll be able to get a total for how much you'd spend for that, each calendar year.
Third & Forth Sections - Bi-Weekly Deductions from Paychecks
For these, I took a look at our last few paychecks to itemize what exactly is coming out of them. I like seeing exactly how much we are paying for our benefits, our retirement accounts, membership/union dues, etc.
Fifth Section - Monthly Income
Here, I recorded the average monthly income that our household brings in. On top of our base salaries, we also have overtime, part-time, etc to consider and factor in as well. For my spreadsheet, I only factored in our base salaries without overtime, and the part-time positions that Eric has a set schedule per month for. The additional time (which truly adds up throughout the year - I left out of the sheet, as those figures I do not consider to be guaranteed/expected monthly income).
Sixth Section - Annual Miscellaneous Costs
Here, I listed the following: Vacations, Holidays, Birthdays, Weddings/Other Parties. I made an estimate based on this past year, how much (average) we spent on holidays, birthdays, vacations, etc. To be safe, I was not conservative on my numbers - I wanted to write in a little more in each of these rows to be safe and get a true glimpse of how much we spend for these miscellaneous costs.
On top of the vacations, holidays, birthdays, weddings/other parties, here is where you will also want to write in averages for how much you spend eating out for breakfast, lunch or dinner each month, spending money per month that you're comfortable spending for clothing, make-up, crafts or just extra cash that you'd like to allow yourselves each month for other purchases. Also consider things like donations to charities, fundraisers, etc. Then multiply those numbers by 12 to get your annual figure.
What's Next?
Now that all of your sections are completed, what's next? Now - I want to revisit the bottom of the first section (that I told you to skip above):
"Average Annual Bill Costs" - Divide the total of your section 2 expenses by 12, and record that number in this row. This is how much you need to plan for to cover those annual costs that you recorded.
"Average Miscellaneous Costs" - Divide the total of your section 6 expenses by 12, and record that number int his row. This is how much you need to plan for to cover those miscellaneous costs that you recorded.
^ With the above figures totaled into your "Monthly Bills" - you'll again, easily see how much you need to plan for to set aside and save each month in order to cover those expenses that you know you'll have throughout the year.
When to Update Your Sections?
This shouldn't be just a one-time thing. You should keep on top of your spreadsheet, and update your expenses often. Key times to update your spreadsheets? Each time you get a raise, a bonus, a schedule change, a change or addition in an income source, a family status change - marriage, having (or planning for) a baby, etc.
Now, Budgeting!
Now that you have all of your figures specifically outlined, and your totals clearly identified - the hard part [the math and collecting of information] is over (and hopefully, you're not having an anxiety attack or panicking over how fast things added up in your "total" rows).
It's much easier to see now where you money is coming from, going to, being spent on, etc.
Now, that you have all of these figures, you can start adjusting those rows in each of your sections, to better meet your current plans for your current situation. Here is where you should note the difference in totals from Section 1 and Section 5. Are you happy with how much money you have left over? Is it the amount that you want to have to put away for savings, or other investment options? If so - great, and keep working at it! If not - it's easy to make changes to get you on the track where you'd like to be.
Example - Those bi-weekly or monthly manicures/pedicures add up, and was something that I quickly and willingly wanted to cut out of my budget. Sure, it's nice to have it done and I will still occasionally treat myself here and there (something that I budget for); however, for me - it wasn't something that I needed or really found necessary. I could easily do my nails myself and am happy to know exactly how much more money I'm putting back in to my budget to either spend on something else that we need or want to plan for - or knowing that the money is going to our savings account instead of the nail salon.
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I hope that you all are still with me! Definitely tweak the spreadsheet to your household, as you see fit. There is so much that you can do to customize the spreadsheet to your expenses, and I strongly urge you to try this (at least once!) It's a huge help seeing the exact breakdown of your income and your expenses, and makes purchases, investment choices, and planning for thing like retirement or life events like purchasing a new home, having a baby, etc. so much easier and less stressful.
Good luck and please feel free to reach out to me if you're trying this spreadsheet out and have any questions on how I broke things down between sections. Happy budgeting!! :)
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