Why I Always Go Back to a Budget Spreadsheet As a Financial Planner

  • I tried using budgeting apps, but found that they didn’t properly categorize my expenses.
  • I always come back to the same approach: an old-fashioned budget spreadsheet.
  • I can customize expense categories to my needs and track my expenses accurately.

There’s no shortage of budgeting apps and tools, with plenty of bells and whistles to help you get the most out of your money. In fact, it’s now easier than ever to track and categorize your transactions right from your smartphone.

As a financial planner, I frequently offer tips on budgeting, including why it’s important and the best way to track your spending. But unlike most people, I track my own expenses using a good old-fashioned spreadsheet.

Why I’m Not Using a Budgeting App

Many apps advertise themselves as seamless to use, automatically recording all your expenses and categorizing them. The problem is that no software is perfect and budgets are unique to your personal financial situation.

Even after successfully linking all my accounts to a budgeting app (which took longer than expected), I still had to log in regularly to make sure everything was categorized correctly. And for most purchases, they weren’t. For example, my daily coffee purchase was categorized as “dining out,” although I wouldn’t call it that. Manually fixing every purchase takes time, and it quickly became too much for me.

Although the apps are easy to use, they won’t actually change your spending habits unless you actively work on them. Because my expenses were automatically added to my app, I would go days (even weeks!) without checking my budget, falling into overspending periods.

Once I came back to a spreadsheet, I never looked back. Manually tracking everything myself helped me slow down and watch what I was spending, which helped me focus on changing some of my unsavory financial behaviors.

How I created my budget spreadsheet

Figuring out my budget based on my lifestyle and needs definitely took time and a lot of trial and error. I used a generic template I found online and modified it to suit my spending habits and needs.

One of the things that made my budgeting process easier was that I had been tracking my expenses for years and had a pretty good idea of ​​what budget categories to include and what to omit. I include an average of how much money I expect to spend on each category, which helps me see if I’m overspending in real time. Sure, unexpected costs crop up, but having baseline numbers keeps me mentally on track and aware of my expenses.

A key aspect of my budget is my savings, which I include as an essential expense. I automatically put it in my budget every month to make sure I commit to saving. I have also set up automatic transfers which make saving efficient and easy.

I use a number of fairly specific categories. For example, I have a line item specifically for Amazon purchases and another for coffee. Tracking them separately makes it easier for me to understand how much I’m spending, instead of lumping them into another category. While this level of detail doesn’t work for everyone, it helps me identify exactly where I’m spending the most money and helps me find areas to cut back on.

At the end of each day (or every other day), I check my checking account statements online and enter my purchases into my spreadsheet. Not only does this help me avoid forgetting to track a purchase, but it also helps me stay on top of any errors or unexpected charges I may have to dispute.

At the end of each month, I go back and review my monthly spending and identify the themes of my spending and if there is anything I need to focus on or adjust for the next month. I will also see how well I am on track to achieving my larger financial goals.

I admit this can all be meticulous and take longer than an automated application, but working consistently with my budget gives me a sense of financial control and allows me to keep working towards my financial goals.

The best way to budget is to find something that works for you

Most people don’t keep track of their money, and as a financial planner, I understand why: it can be frustrating and time-consuming. If you associate budgets with headaches and stress, you’re not alone. But budgeting can be quite the opposite.

Budgeting helps you track your expenses and stay organized, which can reduce stress. It can help you identify areas in your life where you’re overspending and where you can reduce your spending. It also gives you the foundation to pursue your other financial goals, like building an emergency fund or saving for a down payment on a house.

While there’s no right way to create a budget, there is a right way to use it – consistently and accurately. A budget that’s out of date or missing items is like a leaky faucet: untracked expenses can quickly pile up and flood your finances.

While I’m happy with my old-school method of budgeting, that doesn’t mean it’s the right decision for you. I believe the best budget for anyone is one that they stick to for the long term.

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