Excel in Budgeting

A friend of mine recently told a job interviewer she loves excel.

What isn’t to love about excel.

Excel (or similar spread sheet style programs) are simple and effective tools for budgeting.

For some, budgeting can be a scary term. However, with the assistance of an accountant who knows your financial situation, budgeting is very straight forward and effective in helping you determine your financial parameters and reach your financial goals.

I am a fan of a monthly budget. If you are paid fortnightly, a fortnightly budget may be more appropriate.

When preparing a budget it is important firstly to list all of the possible outgoings for each period. Secondly, it is important to be realistic about the dollar amount of the outgoings. When I have helped clients prepare budgets, there is a tendency for a client to say something along the lines of “I currently spend $1,000 per month on clothes but I am going to cut it down to $500 from now on”. If $1,000 is currently what you spend, this is what should be in the budget. Whether you can afford the $1,000 or not will become quite obvious once the budget is completed. It is at this point (when the budget is finalised) that spend on individual items will be adjusted.

As with most things in life, sticking to a budget needs discipline. But using a budget (in Excel or similar) as a spending guide each fortnight or month will have a positive outcome.

A budget allows you to gain control of your spending habits and an understanding of where your money is going. It enables you to change where your money is spent.

A budget will also allow you to implement an affective savings plan. Knowing what you can realistically save each period and sticking to it, no matter how small, is more achievable than a sporadic approach. This works particularly well for example if you are saving into some sort of investment which experiences market peaks and troughs. A regular contribution will even out the market bumps over the longer term, what we call Dollar Cost Averaging.

If you would like assistance with preparing a personal budget please contact me at sarah.willoughby@willoughbys.com.au