Tag: Budget Creation

How to Budget Step 9 – Monitoring your Budget

How to Budget Step 9 – Monitoring your Budget

You may have thought you were done when you created and balanced your budget.  However, there is one very important step left in the budgeting process – making sure you are living within the guidelines set by your budget, i.e., monitoring your budget.  That is, 

How to Budget Step 8 – Refining your Budget

How to Budget Step 8 – Refining your Budget

Very few people have a balanced budget on the first try.  This week, I’ll talk about how to refine your preliminary budget if it isn’t in balance.  I have been very fortunate in that it has been a long time since I found it challenging 

How to Budget Step 7 – Create your Budget

How to Budget Step 7 – Create your Budget

You made it!  This week your only task will be to create a first draft of your budget.  

Budgeting can be challenging as you try to balance your long-term goals with your short-term needs and wants.  As such, I suggest creating it in two steps. This week I’ll provide guidance on creating the first draft of your budget.  Next week’s post will talk about how to refine it.

Practical Steps

To create your budget, you will enter values in Column D of the Budget tab of your spreadsheet.  As long as you don’t enter values in Column D of any of the “Total” rows, the formulas will automatically calculate those values.

While the spreadsheet was built to be fairly flexible, one of its weaknesses is that it is not easy to add or delete income or expense categories once you have started entering your budget amounts.  So, before you get started, I suggest making a final review of the line items on the Budget tab. If you need to make changes, you can look back at last week’s post for the instructions.

If you find you need to add or delete a line after you have entered budget amounts, here’s what you’ll need to do:

  1. Make a note of the budgeted amounts of all of the line items you’ve entered.  
  2. Add or delete the line item name according the instructions in the last week’s post.
  3. Copy the formula from cell D110 to all of the cells into which you previously typed values.  You can copy a formula by:

    a. Going to cell D110.

    b. Holding down the Ctrl key and hitting C.

    c. Moving your cursor to cell D11.

    d. Holding down the shift key and then hitting the down arrow until all of the cells into which you entered values are highlighted.

    e. Holding down the Ctrl key and hitting V.

    f. Re-enter the budget amounts that you noted.

If you don’t take this approach, some or all of your category names in Column A will change rows, but your budgeted amounts in Column D will stay in the same rows.  You’ll end up with a mismatch between category names and budget amounts.

Budget Amounts

For each line item in your budget, you’ll need to select a budget amount.  These selections will require your informed judgment. Things to consider in making your selection include:

  • How much you’ve recorded in each category over the past several weeks, as shown in Column B.
  • Any changes in your income or expenses you anticipate in the next several months.  
    • Some of these changes might result from life changes – a new job, moving, getting a roommate, getting married, having children or the like.
    • Other changes might result from intentional changes in your habits – fewer meals in restaurants, hiring a cleaning service, newly carpooling, among others.
    • You’ll also have changes from prior expenses if you change your spending or income to better align with your financial goals.
  • If you’ve used the tax approximation, the amounts in Column C for Federal and State/Provincial income taxes.
  • The goals you set as described in my post on setting financial goals.  You might want to increase one or more of your emergency savings, savings for a designated purchase (vacation, house, new car) or long-term or retirement savings.

Final Steps for This Week

Once you have completed your first draft, take a look at the value in Column D of the Grand Total row.  If that value is positive, it means you have more income than expenses and additions to savings. If it is negative, your expenses and savings goals are higher than your income.  In this href=”https://financialiqbysusieq.com/how-to-budget-step-8/”>post, I’ll talk about things you can do so the value is close to zero.


How to Budget – Step 6: Review your Expenses

How to Budget – Step 6: Review your Expenses

You’re almost there!  Only one more week until I describe how to create your budget.  Before you can do that, you’ll want to make sure that the income and expenses you’ve entered don’t have too many mistakes.  In this post, I’ll talk hot to review the 

How to Budget Step 5 – Paychecks and Income

How to Budget Step 5 – Paychecks and Income

Your budget includes your income in addition to money you spend.  In my previous posts on the budgeting process, I talked about setting your goals and tracking and recording your expenses.  This week, I’ll focus on your paycheck and other sources of income. Before getting 

How to Budget 4 – Expenses Not Paid Monthly

How to Budget 4 – Expenses Not Paid Monthly

Your budget won’t be complete unless you include all your expenses, including those that you don’t pay every month.  In the past three weeks, I talked about creating systems for tracking and recording your expenses and setting your goals.  This week, I’ll focus on expenses you pay less often than monthly.

Before getting to that topic, here are your budgeting tasks for this week:

  1. Continue using and refining your expense tracking system.
  2. Continue to enter your expenses into the spreadsheet.
  3. Identify and record expenses that you pay less frequently than monthly into the spreadsheet using the instructions below.

Less-Than-Monthly Expenses

Many people have expenses they pay every year, but don’t necessarily pay every month.  Examples of these expenses include car and home/renters insurance, property taxes (if you own your home), car maintenance and registration, contributions to your retirement savings other than those that are withheld by your employer, and holiday and birthday presents.

Even though you don’t pay these expenses every month, you’ll need to include them in your budget so you have the money when you need it.  In practice, I suggest transferring the total budgeted amount for all of these expenses to a separate account, possibly a savings account at the same bank as your checking account, every month or every time you get paid.  You can then transfer the money back to your checking account to pay the expenses when they are due.  You’ll need to remember that the money in that account is designated for specific purposes and shouldn’t be used for emergencies and particularly not for discretionary purposes.

Identifying Your Less-Than-Monthly Expenses

The first step in recording these expenses is to identify them by:

  • Looking at the examples I’ve listed above.
  • Thinking about these types of expenses.
  • Looking through at least one year of bank and credit card statements.

Determining the Amount of Less-Than-Monthly Expenses

The next step is to estimate how much these expenses cost you each time you pay them and how many times a year they are paid.  It is likely that you have not paid one or more of these types of expenses during the time period you are tracking and recording your expenses.  For others, you may not have paid an amount corresponding to roughly one-twelfth of your annual costs.   For example, if you pay your property tax bill twice a year and have recorded two months of expenses, you’ve probably paid either no property taxes or a half year’s worth.  Neither of these amounts corresponds to the average amount you would pay in the two-month time period you’ve been recording your expenses in my example.

You’ll know the annual amount of some expenses fairly closely.  Examples of these are insurance and property taxes. For these expenses, this process will be fairly straightforward.  For other expenses, such as presents and car maintenance, you’ll have to use a lot of judgment to estimate how much you tend to spend.  Again, a review of your bank and credit card statements for the past year will be informative.

Adjust for Expenses Already Recorded

Once you have created your list of these expenses, review the transactions you have entered so far on the other tabs to eliminate any that you have already included.  If you have already recorded a small amount for this type of expense but it is not as much as you would expect on average, you can adjust the payments on the list you just made downward for the transactions you’ve already recorded.  This adjustment is a bit complicated.

  • Total the amount of expenses you have recorded in this category.
  • Divide the total by the number of months of transactions you have entered.
  • Multiply the amount by the ratio of 12 divided by the number of times per year you expect to pay this expense.
  • Calculate the total annual amount you expect to pay from the list you have made.
  • Subtract that result from the amount on your list of expenses to get the amount you will record.
  • Divide that difference by the number of times per year you make that payment.

Recording Less-Than-Monthly Expenses

You can now enter the information from your list, after adjustment for transactions you’ve already recorded, on the Less-Than-Monthly Expenses tab.

Rows 1 through 6 briefly summarize these instructions.

You’ll enter the information about your cash transactions starting in Row 11.  I’ve highlighted the cells for inputs in light green.  Enter the amount of each payment in Column A and the corresponding category in Column B.

If you make contributions to a retirement savings plan other than through a payroll deduction (i.e., Roth or Traditional IRA or individual RRSP or TFSA) and want to use the built-in tax approximation, enter “Retirement Savings” in Column B.

If you make estimated tax payments to the Federal or state/provincial government and plan to use the built-in tax approximation, enter “Federal Income Taxes” or “State Income Taxes”, as appropriate, in Column B.

In Column C, you’ll record how many times a year you make a payment of this amount.  For example, if you pay your car insurance twice a year, enter the semi-annual payment in Column A and 2 in Column C.

New Categories

As you start preparing your budget, you might find that there are new categories of income, expenses or savings that you want to include going forward.   You can add these categories on this tab with $0 in the amount column.  These categories will then appear as line items in your budget which I’ll discuss in a couple of weeks.

Download Budgeting Spreadsheet Here


How to Budget Step 3 – Setting Goals

How to Budget Step 3 – Setting Goals

Setting one to three realistic financial goals is critical to financial success.  In Steps 1 and 2 of this series, I talked about creating systems for tracking and recording your expenses.  This week, I’ll finally focus on the first step I take in budgeting (as 

How to Budget Step 2: Tracking Expenses

How to Budget Step 2: Tracking Expenses

Now that you’ve found a system for tracking expenses for budgeting, it is time to start recording them in your spreadsheet.  In Getting Started with Budgeting, I talked about how to track your expenses.  This week, I’ll focus on the following steps from my very 

Getting Started with Budgeting

Getting Started with Budgeting

I’m so excited you want to create a budget!  In my very first post, I outlined the steps I use to do my budgeting.  They are:

  1. Identify my financial goals.
  2. Determine the length of the period I’m going to include in my budget – a month and a year are most common.
  3. Figure out how much income I’m going to earn during my budgeting period.
  4. Create a spreadsheet for tracking my expenses.
  5. Enter all of the checks and cash transactions from my checkbook into the spreadsheet and identify the type of expense.
  6. Enter all of the transactions on my credit cards into the same spreadsheet, identifying the type of expense.
  7. Add up all of the expenses in (5) and (6) by type of expense.
  8. Make a first pass at the expense part of my budget by looking at how much I’ve spent and whether any of my expenses are going to change.
  9. Compare my expense budget to my income.
  10. Make sure that I am not overspending my budget.

Although I start with setting goals, collecting information about how much I’m currently earning and spending takes some time so I’m going to cover those topics first.  I’ll talk about setting goals in a couple of weeks.

This Week’s Budgeting To Do List

Here are your tasks for this week:

  1. Download the spreadsheet and put it some place you can find easily.
  2. Fill in the Basic Inputs tab of the spreadsheet.
  3. Develop a system that will help you remember everything you’ve spent.
  4. Use your system this week.


I’ve already created the spreadsheet for Step 4 of my planning process (the first numbered list above) for you!  It is attached to this post. I note that it is a practical spreadsheet and is not intended to be high-tech or foolproof.  Nonetheless, I think it will be a very helpful tool for getting started. Also, you’ll need Excel (for Windows or an Apple) or access to Google Sheets (part of Google Docs) to use this spreadsheet. We’ve tested it on those platforms and it seems to work, though it seemed a bit slow when re-calculating in Google Sheets. It does not work on Apple Numbers.

Each time you open the spreadsheet, you may need to click one or both of the “Enable Editing” or the “Enable Content” buttons at the top of the screen. By clicking these buttons, you’ll be able to enter your data, save the spreadsheet and use the macros.

The first time you open the spreadsheet from the web site, you’ll need to save it some place you can access – a drive on your computer, an external drive, or the cloud, for example. You can accomplish this task by selecting File from the menu at the top and then selecting Save As. You can the decide where to put it and what to name it. In the future, you can open the spreadsheet with your data from wherever you saved it.

Basic Inputs tab

There are four questions on the Basic Inputs tab.

  1. How many months of transactions have you entered?  I can’t imagine trying to create a budget without looking at a minimum of one month’s expenses.  It is usually best to look at three to six months, if not a full year. For now, you’ll probably want to enter 1 in cell B4, but can change that value as you enter more transactions.  The formulas in the spreadsheet will all work with fractional values, so you can put 1.5 in cell B4 if you’ve been tracking expenses for 6 weeks.
  2. Do you want to create your budget on a monthly or annual basis?  I prefer to look at income and expenses on an annual basis, but suspect that most younger readers still focus on each month one at a time so have offered both options.  There is a drop-down box in cell B5 to let you choose.
  3. Country for Federal Income taxes.  Because your budget income and retirement savings may not be the same as the transactions you’ve entered, I’ve added extremely simplified calculations of US and Canadian federal income taxes.  These calculations assume that you file your tax return as a single person, take the standard deduction and have no income other than wages and investment returns. Select the country that applies to you from the drop-down box in cell B6.  If you don’t want these calculations to be performed or don’t pay taxes in either of those countries, select “Other.”
  4. Enter your approximate state (provincial) and local income tax rate.  As with the Federal taxes, I’ve added an extremely simplified calculation of state/local income taxes.  It will take the approximated Federal taxable income and multiply it by the rate you enter in Cell B7 to estimate state/provincial and local income taxes.  If you don’t want these calculations to be performed, enter 0.

Remembering What You’ve Spent

One of the hardest parts about budgeting is figuring out where your money currently is going.  You’ll need to devise a system that will allow you to remember how and on what you spend money so you can track it in the spreadsheet.  Here are a few ideas:

  • Keep a log right inside your front door.  I have a friend who made it a habit to write down everything she bought as soon as she walked in her door.
  • Keep receipts for everything you buy and put them in an envelope.  If you take this approach, you’ll have very detailed accurate records.  You have to ask for receipts for everything you buy, even small expenditures such as candy or coffee.
  • Use the note-keeping app on your phone.  Because most of you have your phone with you at all times, you could make a note on your phone indicating what you bought and how much it cost.
  • Find an app that will allow you that will track the information for you.  Someone told me there is one called Mint, but I don’t know anything about it.  If you find one you like (or even one you don’t like), feel free to post a comment so other readers can learn from your experience.

You can use any combination of the above approaches or another one, as long as you make sure you are tracking all of your expenses.  Another option is to track only the expenses that won’t be obvious when you look at your transactions on line, in your check book or on your credit card bills.  For example, you don’t really need to make a note of the purpose or amount of your utility bills, as you can identify those transactions easily.

Most Important Expenses to Track

The transactions that are most important to track are:

  1. things you buy with cash.  These transactions are so important that I’ve included a feature in the spreadsheet that will tell you how much cash you spent that you haven’t tracked!
  2. things you buy at places that sell a wide variety of items.  Examples of places that fall in this category are Walmart, Target and Costco.   When you record those expenses, you’ll want to split the amounts into major categories, such as groceries, electronics, housewares, gifts and the like.

Use Your System

Whatever system(s) you choose, get started with it!  If it isn’t working well, figure out how to change it so it will work for you.  Over the next few weeks, I’ll talk about how to complete the other tabs in your spreadsheet.

One Last Tip

If you share expenses with someone else (e.g., your spouse or significant other), your budgeting process will be much more successful if you agree to do it together before you start.  While a budget one person creates for both of you is better than no budget at all, it will be much better if it is a joint venture. One of you can do all of the spreadsheet work, but it will be very helpful if you both have systems for tracking expenses and, most importantly, agree on your final budget.  One of my biggest budgeting mistakes was doing all the work to create and live within a budget by myself. When I told my husband he had a budget, he just laughed! I actually thought it was quite generous, but that wasn’t the point.


Download Budgeting Spreadsheet Here


Many thanks to my friends, Marko, Billy, Natalie and Jingyi, and my sister, Ev, for testing the spreadsheet. A special thanks to Jingyi for writing the macros.

When Is It Good to Pay Off Student Loans

When Is It Good to Pay Off Student Loans

 This week, I’ll conclude the case study about Mary and her savings.  Her last question focused on whether to pay off her student loans.  The considerations include: The interest rate on her loans. How many more payments she has. What she can earn if she