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5 Essential Steps to Use an Excel Budget

If you use an Excel budget, there are five things worth keeping in mind.

  1. Join budgeting with another habit
  2. Pocket your receipts
  3. Set long-term goals
  4. Set mini goals
  5. Keep it seriously simple

Of course I'm biased against using Excel as your budgeting solution: I sell a product designed just for that! But, I'm going to go through these five keys for success if you're using an Excel budget, or really any kind of budget.

1. Join Budgeting with Another Habit

You might have already used this with some other good habits you've wanted to acquire. I do this with budgeting and have found it to be very successful. When I come home in the evenings and check my email I open up the budget and enter any purchases I might have made during the day. I'll usually yell to my wife (if she's not right there with me) to see if she made any purchases. The thinking and recording takes about 1 minute.

You'll want to make sure you associate your budgeting habit with something you already do very regularly, daily if possible. I chose checking my email because I do that every night after dinner, I'm already at the computer, and usually my wife is around if we have to talk about anything to do with the budget.

I don't think taking a shower is what you'll want to use unless you use your computer while in the any rate - one way to excel your budget is to solidify that habit of writing down your purchases - whether you use YNAB or a pencil and paper, to excel, you must record!

2. Pocket Your Receipts

This is plain and simple. When the cashier asks you to if you want a receipt, say "YES!" Stick it in your pocket. Don't stick it in your purse. Things get lost in purses. If you want to stick it in your wallet then leave a portion of it sticking pretty far out so you will see it when you take your wallet out of your pocket at night. This isn't rocket science, but it's pretty important.

I don't necessarily use the receipts to record purchases - only on occasion. Really what it helps you do is to remember to budget. At night, when you're cleaning out your pockets you'll remember you bought that cheeseburger and you'll record it in the budget. I want to reiterate, whether your household budget is digital, or a pencil and paper, you must record your purchases!

3. Set Long-Term Goals

A surefire way to get burned out when trying to do something new is to not have any real direction. If you really want to make your budget work then you will have long-term goals in place that will keep you faced in the right direction.

Do you want to have the house paid off? Get rid of credit card debt? Retire early? Retire comfortably? Save for a vacation to Europe? Whatever it may be, long-term goals are essential to the life of your household budget. Excel won't set your goals for you, you have to do it.

4. Set Mini Goals

Right along with long-term goals for your family or household budget, excel with some mini goals that are attainable in a very short time frame. Set a goal to have a certain credit card paid off in the next two weeks or two months, save $100 each month, save the money you need to buy that new couch you want - but this time you'll buy it with cash. Mini goals will keep you motivated and that will be key. Your household budget should motivate you, not make you depressed.

5. Keep it Seriously Simple

This might be the most important aspect if you really want to Excel your household budget. You have to keep it simple! I can't stress this enough. If your budgeting takes more than 2 hours per month then you're making it too complicated (unless of course, you love budgeting, and want to spend several hours each month crunching numbers). You'll need to monitor three aspects of your budget:

  • Inflow
  • Planning
  • Outflow

Make sure you record every inflow. If you're familiar with the YNAB system of a Personal Budget then you'll note there's room for inflows. It's important these are tracked.

With planning, you need to make sure you're doing it each and every month. My wife and I usually budget on the last Sunday of each month. Sundays are much less hectic and lend themselves well to sitting down and planning the next month's purchases for a few minutes. The YNAB budget allows you to move down the categories and budget money into each category that will be spent during the coming month. You'll need to have some sort of planning built into your household budgeting system. As you budget each month, you'll get faster and faster at it. My wife and I "excel" in this area. It usually takes us about 15 minutes each month.

Finally, you'll need to watch the Outflow - and that means every single one. If you buy a soda at Wal-Mart for $.25 then you need to record it. The YNAB system's outflows takes care of expenses. You simply record the date, a short description, and the amount.

In summary, remember to keep things simple. You don't have to use YNAB to budget effectively. However, I personally haven't seen anything better for effective household budgeting, but I also recognize Excel is an extremely powerful tool if you want to create your own budget also (it's just a lot more work). 

Want us to do the heavy lifting? Sign up for a free 34-day trial of YNAB and we'll help you set up your budget template in beautiful technicolor with all the calculations already built in.

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5 Essential Steps to Use an Excel Budget