Budgeting 101

 

  • Do you have enough money tucked away to cover your regular expenses?
  • Do you know what your regular expenses are?
  • Do you know what your income is?

 

I developed a simple budgeting spreadsheet back in 2011 to help me capture income and expenses. It’s a bit of an eye opener when you do it; but I love it and have maintained it every year since! 🙂

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There is probably a bunch of fancy ways to put together a budget; however this spreadsheet is designed to be a starting point so that you can capture income and expenses on a weekly, monthly and yearly basis. It will provide you with awareness so that you can be in better control of your money.

Using and entering information into the spreadsheet

Income

The first step in putting together a budget is to capture/gather all your income information. There are multiple types of income. Common sources are listed below but are not exhaustive:

  • Employment income – from full time, part time or casual employment;
  • Business income;
  • Sub–contracting income;
  • Dividends from shares/investments;
  • Rental property income;
  • Interest from bank account savings;
  • Superannuation/retirement income;

Basically, any money that you receive via your bank account or in the form of cash-in-hand payments is your income and should be recorded as such on the budget spreadsheet.

If you can’t easily gather your income information, here are some places to check:

  • bank statements, either paper copies or via internet banking
  • pay slips
  • your local taxation or state revenue office notices of assessment for the previous year

How should you capture this information if your income is irregular? If you have expenses, you need an income figure to work towards, but it needs to be realistic. There are several ways, two of which are outlined below:

  • your local taxation or state revenue office notice of assessment for the previous year – if you expect the year to be similar, use that figure.
  • If you know your daily/weekly/monthly rate, estimate how many days/weeks/months you will be employed throughout the year and use that figure.

Entering information to the spreadsheet – income

Only enter information into the fields coloured green.

The table below lists the field names and what should be entered into each. I have also listed details about the calculated fields (coloured grey).

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Expenses

So, this next part is rather huge, and will often take more than a day to track down all expenses. Think about everything you have to pay for on a regular basis. It doesn’t matter if you are in arrears. The main point of this exercise is to record everything you are obligated to pay on a weekly, fortnightly, monthly and yearly basis.

And don’t beat yourself up over this part. You are not doing it to judge yourself. You can’t change the past, but if you know where you are now, you can put a plan in place to improve your situation going forward.

It’s important you list the minimum debt repayment required when first putting your budget together, that way you will know exactly what you have left to put towards your debts, which will enable you to close them out sooner.

Here is a rough list of items that you will likely need to record – remember everything should be recorded – you can cut down on expenses when you know where you stand:

  • Fitness related fees – gyms, pilates, yoga, boot camp, swimming, personal training, basketball, netball
  • Donations
  • Insurances – income protection, health insurance, car insurance, home and contents insurance, pet insurance, trauma insurance
  • Fuel – petrol, diesel, gas used in your car, motorbike, scooter, lawn mower
  • Car expenses – car registration, roadside assistance, servicing, tolls, tyre replacements, maintenance
  • Transportation – train fees, bus fees
  • Food – eating out, groceries
  • Beauty treatments – hair dressers, day spas, waxing
  • Gifts – money you spend on birthday, Christmas, Easter, celebration gifts
  • Financial fees – credit card annual fees, home loan annual fees, any financial institute you pay Note: this does not include interest expenses
  • Clothing – children, sports, adults, uniforms, shoes
  • Children – nappies, formula, baby food, child minding fees, daycare, school fees, sport fees, toys, games, excursion/camp fees
  • Medical expenses – medications, doctors visits, specialist visits
  • Work expenses – anything that you need to purchase to do your job
  • Tax fees – any expenses that you pay to complete your tax via accountants and such
  • Household entertainment expenses – paid for TV, for example, Foxtel, Presto, Netflix, Stan
  • Telecommunications – mobiles, home phone, internet
  • Energy expenses – electricity, gas
  • Household expenses – security monitoring, water usage and rates, council rates, furnishings
  • Other household expenses – soap, sanitary products, toilet paper, water filters
  • Pets – food, vaccinations
  • Play money – any money you put aside for activities you do outside the home; for example a night out, seeing a moving, coffee out with friends, going to a concert etc.
  • Debts/loans – list all minimum debt repayments on all debts/loans
  • Anything else – do you have any other expenses?

Entering information to the spreadsheet – budget

For the budget area of the spreadsheet, I have broken it into 4 sections. There is a section to record weekly, fortnightly, monthly and yearly expenses. If you keep scrolling to the right, you will see each section.

Only enter information into the fields coloured green.

The table below lists the field names and what should be entered into each. I have also listed details about the calculated fields (coloured grey).

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Expense Summary

The expense summary section contains 3 calculated fields, which are the sum of all columns that relate to weekly, monthly and yearly expenses.

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Overall Summary

The overall summary shows you your income and expenses broken down weekly, monthly and yearly. This section of the budget allows you to see exactly where you stand so that you can cut costs in some areas and increase debt repayments in others.

If you have a goal for your expenses, there are fields available for you to enter the goal amount weekly, month and yearly. These fields are coloured green.

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The Budget Spreadsheet File

 showmeyourbudget-budget-spreadsheet

Now what?

You can only work with what you have now, so slash your expenses where you can and put a plan in place to pay off your debts.

This site has a pretty cool strategy for reducing your expenses to 30% of your income so that you can direct 70% of your income to your mortgage –

http://www.mutilatethemortgage.com

You can do it!

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