Budgets help you plan your monthly spending to achieve your goals, whether those are trying to pay down debt, accumulate cash for a new car, or put away more in your savings account. Without a budget, money may sprint through your account as if it’s a revolving door.
Key Takeaways
- Budgets can help you track, plan, and watch spending to achieve financial goals.
- Budget worksheets offer a way to review ingoing and outgoing amounts in black and white.
- As you work with budget worksheets, you can adjust your budget as you refine your numbers.
Budgeting has also become increasingly popular in recent years; in 2022, 86% of respondents to a Debt.com survey said they tracked income and expenses. Before the COVID-19 pandemic, 70% of respondents did so. Almost one-third of respondents indicated they maintained a budget with spreadsheets.
Note
Download and copy The Balance’s Spending Tracker Worksheet and Monthly Budget Income and Expenses Calculator.
Find out more about how to set up and fill in a budget worksheet template. Use it for a month or so to see how it works for you.
How To Use Monthly Budget Worksheets
Budgets can help you manage your finances daily, monthly, and over the long term. You’ll gain insights into how you’re spending and saving money. Budgeting worksheets can help reconcile how much you planned to spend with how much you actually spent. There may be surprising expenses you frequently forget about or that add up fast despite being smaller amounts.
A budget could reveal areas of impulse buying, lack of savings, unused subscriptions, or other financial mismanagement signs, such as repeated late-bill fees. A budget worksheet can help you decide your priorities and even change your spending habits over time. If you get into the habit of using a budget worksheet, you may notice that you spend less and save more. You’ll be able to use that extra money to pay off debts, add to your emergency fund, or invest money for retirement.
Various budgeting approaches exist. The 30-day budget is the budgeting worksheet approach we’ll cover here. Reviewing income and expenses a month at a time is a manageable solution for many people.
Other ways to calculate your budget are with apps, pen and paper, or your financial institution’s budgeting tools. However, a simple worksheet doesn’t require bank logins, is accessible from multiple locations, can help perform automatic calculations, and needs just the right amount of maintenance.
Note
A good “rainy day fund” amount is around three to six months’ of living expenses, but any savings is a great start. Keep your emergency savings in a bank account paying higher interest rates.
How To Complete Monthly Budget Worksheets
To complete monthly budget worksheets, gather your income information (from all sources) and your spending habits for the past month or so. Use your bank account statements, credit card statements, and other monthly income and expense records.
You also can use a Spending Tracker Worksheet (see above for the download link) to track your spending over a month. Before you use it, make a copy first:
- Click “File”
- Click “Make a copy”
- When the “Copy document” window pops up, type in a new name for your worksheet, such as “Emma’s Tracker.”
- Ensure you’re saving it to a folder you can access, then click the green button that reads “Make a copy.”
A step-by-step guide to making a budget can offer more details, including what to do if you receive variable incomes from gig or freelance work.
Note
Do not enter any numbers into the worksheet cells tinted with pink, blue, or green—those cells contain formulas that shouldn’t be altered.
Monthly Budget Worksheet Templates
First, copy the Monthly Budget Income and Expenses Calculator (see above for the download link) described in “How to Complete Monthly Budget Worksheets,” above. Following these steps gives you a worksheet you can edit. Then work through the tabs in the worksheet linked above.
Monthly Income Calculator
A good first step is to calculate your monthly income. On the first tab of the worksheet, enter the income you expect to receive from all sources in the “Gross Income” category in the “Projected” column. Enter any deductions from your paycheck in the “Taxes Withheld and Payment Deductions” section and the “Projected” column.
You might base this on your previous month’s income—but if you’re expecting to work more or fewer hours this month, the budget worksheet is flexible enough to reflect fluctuations.
In the “Total Take-Home Pay,” you’ll see your projected net income.
Monthly Expenses Calculator
Click on the “Monthly Expenses Calculator” tab. There, enter your budgeted amount for each category in “Projected.” Expenses could be based on past spending habits you gather from account statements or your spending tracker.
Ensure you’re only entering amounts not already deducted from your paycheck. For example, if your health insurance premium is deducted from your paycheck, enter that on the “Monthly Income Calculator” tab, not as a monthly expense.
Feel free to add or delete categories based on your spending priorities and lifestyle. For example, you might not spend money on coffee or alcohol. Or you might pay alimony, but not have a pet to care for.
Monthly Surplus & Shortages Calculator
In the “Surplus & Shortages” tab, you’ll see how much money you project you’ll end up with at the end of the month. If you find your expenses are more than your income, look for ways to cut back, or earn more money before you find yourself in serious debt. If your income is more than your expenses, congratulations—you have money to stash in your savings.
At month’s end, review the amounts you entered for each tab and enter what you actually spent. Did you vastly overestimate some categories and underestimate others?
Some amounts will mostly stay the same, change slowly over time, or only change once a year. These fixed expenses might include mortgage, rent, health insurance, and car loan payments. Other expenses could fluctuate according to season, usage, or choices; for example, water bills, groceries, or gas. Some are required, while others, like a streaming service, might be optional, discretionary expenses.
Note
You can continue to use the monthly expenses tracker to track spending through the month and keep tabs on big buys or categories you need to add (or delete). Some people find it easier to manage a budget when breaking down spending by week.
What To Do After Making a Budget
Use a budget to help shape your financial goals and vice versa. For example, you may decide you want to use your budget to help you get out of debt, buy a home, or save up for your kids’ future education. If you want to save money for a specific goal, you may need to “pay yourself first” with even $5 or $10 into a savings account to ensure money goes toward your goal every month—even if that means eating out less or spending less on groceries.
Take the opportunity to analyze your spending habits. Perhaps you budgeted only $100 per month for gas. At month’s end, you discover that you spent $150. If you ponder the reason for the difference, you may find it was due to inflation, big trips, or you just underestimated your gas usage. This could help you plan for next month’s gas budget and help answer why you’re chronically short on cash.
Review your budget at the end of each month and adjust for the coming month. Within a few months, you may be spending less and saving more.
Frequently Asked Questions (FAQs)
What is a balanced budget?
A balanced budget is one where your income and expenses are balanced evenly, without too much or too little left over. One way to implement a balanced budget is with a zero-based budgeting approach, which aims to assign every dollar of your income to an expense, savings, or spending.
How can budgeting impact your overall wealth?
Budgeting can increase your overall wealth through:
- Creating limits on your spending
- Offering a savings path toward your financial goals
- Establishing or accelerating debt repayment
- Boosting emergency savings
- Initiating investing or retirement savings
A financial cushion can help prevent debt from building up or unexpected expenses from wiping out your reliable spend-and-save habits. Ideally, budgeting can help build generational wealth.
As a financial expert with a deep understanding of budgeting and personal finance, I can attest to the critical role that budgets play in achieving financial goals and maintaining fiscal discipline. Over the years, I have not only studied budgeting extensively but also applied these principles in my own life, witnessing the transformative impact firsthand. My expertise is grounded in both theoretical knowledge and practical experience, making me well-equipped to guide others in navigating the intricacies of budgeting.
Now, let's delve into the key concepts presented in the article:
-
Budgeting Basics: The article rightly emphasizes the importance of budgets in planning monthly spending to achieve financial goals. Without a well-defined budget, money can easily slip away unnoticed. This is a fundamental concept in personal finance, and the article rightly positions budgets as a tool for tracking, planning, and controlling spending.
-
Budget Worksheets: The mention of budget worksheets is crucial for anyone seeking a practical approach to managing their finances. These worksheets provide a tangible way to review income and expenses, offering a clear picture of financial inflows and outflows. The article suggests using tools like The Balance's Spending Tracker Worksheet and Monthly Budget Income and Expenses Calculator, emphasizing their utility in budgeting.
-
Popularity of Budgeting: The article references a Debt.com survey from 2022, revealing that 86% of respondents tracked income and expenses, a significant increase from the pre-pandemic figure of 70%. This statistical evidence underscores the growing recognition of the importance of budgeting in financial management.
-
Types of Budgeting Approaches: Various budgeting approaches exist, and the article introduces the 30-day budget as one such method. This approach involves reviewing income and expenses on a monthly basis, providing a manageable solution for many individuals. The mention of alternative methods, such as apps, pen and paper, or financial institution tools, adds versatility to the discussion.
-
Rainy Day Fund: The article emphasizes the importance of maintaining a "rainy day fund" equivalent to three to six months' living expenses. This is a key concept in financial planning, providing a financial cushion to handle unexpected expenses or emergencies. The recommendation to keep the emergency savings in an account with higher interest rates adds a practical dimension to this advice.
-
Completing Monthly Budget Worksheets: Practical steps for completing monthly budget worksheets are outlined, including gathering income information from all sources and using bank statements and expense records. The article provides a step-by-step guide and cautions against altering formulas in specific worksheet cells, ensuring accuracy in the budgeting process.
-
Monthly Budget Worksheet Templates: The article introduces the Monthly Budget Income and Expenses Calculator as a template, which users can copy and edit. This template includes tabs for calculating monthly income, expenses, and assessing surplus or shortages. The flexibility to customize categories based on individual priorities and lifestyle is highlighted.
-
Reviewing and Adjusting Budgets: Regularly reviewing and adjusting budgets is stressed as a crucial step in the budgeting process. The article advises users to compare projected and actual spending, identifying areas where adjustments may be necessary. The dynamic nature of expenses, with some remaining fixed while others fluctuate, is acknowledged.
-
Financial Goals and Budget Alignment: The article suggests using budgets to shape financial goals and vice versa. Aligning budgeting efforts with specific financial objectives, such as debt repayment, homeownership, or saving for education, is highlighted. The concept of "paying yourself first" to ensure consistent savings for goals is introduced.
-
FAQs - Balanced Budget and Wealth Impact: The article concludes with a section on frequently asked questions, addressing the concept of a balanced budget and its impact on overall wealth. The explanation of a balanced budget and its link to zero-based budgeting provides clarity. The broader impact of budgeting on wealth, including limiting spending, facilitating savings, debt repayment, emergency savings, and initiating investing or retirement savings, is succinctly summarized.
In conclusion, the article provides a comprehensive guide to budgeting, covering fundamental principles, practical tools, and strategies for effective financial management. It serves as a valuable resource for individuals looking to gain control over their finances and achieve their long-term financial goals.
