How to Create Budget In Excel Spreadsheet

with Template
"Money is a tool. Used properly it makes something beautiful- used wrong, it makes
a mess!" - Bradley Vinson

It takes discipline to use money properly. In this tutorial, we are going to look at how
we can use Excel to properly manage our personal finances. We will cover the
following topics.

 Why manage Budget?

 Major components of a personal finance system
 Using Excel to set personal budgets, record income and expenses
 Visualizing the data using charts

Why manage Budget?

Let's face it, the world we live in is fuelled by money. We go to school to get a good
job, engage in business and other related activities with the main goal of making
money. If we do not manage our personal finances properly, then all of our efforts go
to waste.

Most people spend more than they earn. In order to be financially successful, one
needs to develop a habit of spending less than they earn and invest the surplus in
business ventures that will multiply the invested money

Major components of a personal finance system

This is a basic personal finance system so we will consider the following
components;

1. Projected income – this is the money that you expect to earn now and in the
future.
2. Budget – this is a list of the items that you expect to buy, quantities and their
respective prices
3. Actual income – this is the actual money that you earn as time progresses
4. Actual expenditure – this is the money that you actually spend buying things

The variance between the projected income and actual income gives us the
performance indicator of how accurate our estimates are or how hard we are
working.
The variance between the budget and the actual expenditure give us the
performance indicator of how disciplined we are when it comes to sticking to a
budget.

Since saving is a part of the goal of having a personal finance system, the actual
income vs. the actual expenditure say on a monthly basis gives us an idea of how
much we would save over a year.

Using Excel to set personal budgets, and record income

and expenses
We have looked at the components of a personal finance system, and we will now
use what we have learnt so far to implement the above. We will create two
workbooks for this tutorial, one for income and the other for budgets.

When you are done with this tutorial, your workbooks should look as follows

Open Excel and create a new workbook

Income sheet
 Rename the Sheet1 to Income
 Enter the data shown below
 Projected Monthly Income

S/N Description Amount ($)

1 Salary 600.00

2 Freelance works 250.00

3 Others 180.00
 Grand Total

Expected annual income:

Actual Income

S/N Description Amount ($)

1 Salary 600.00

2 Freelance works 200.00

3 Others 150.00

Grand Total

Actual annual income:

Formulas for Income sheet

We will now need to;

1. Calculate the monthly income for both projected and actual income.
2. Compute the projected annual income and actual annual income based on
the monthly total.
3. Find the variance between the actual and project annual income
4. Show tips on how we are doing using logical functions
5. Use conditional formatting to highlight how well we are managing our finances
Tutorial Exercise 1
1. Find the sum of all monthly income sources. Use the SUM function. Do this
for both projected and actual monthly income.
2. Find the annual projected and actual income by multiplying your answer in
question 1 by 12.
3. Find the income variance by subtracting the projected annual income from the
actual annual income.
4. Add a comments row just below the tables. Use the IF functions to display
"You need to work extra hard to meet your income targets" if the variance is
less than zero (0) else display "Great job working smart and harder".
5. Use conditional formatting to change the text colour to red if the variance is
less than 0 else change the text colour to green.

If you are stuck on what to do, read the articles on formulas and functions, and
Visualizing data using charts in Excel.

Expenditure sheet
Add a new sheet and rename it to Expenditure

Enter the data as shown below

Budget

S/N Item Qty Price Subtotal

1 Rentals 12 210.00

2 Bills 12 100.00

3 Groceries 12 230.00

4 School 2 500.00

5 Miscellaneous 6 133.00
 Grand Total:

Expected Annual savings:

Actual income

S/N Description Qty Price Subtotal

1 Rentals 12 210.00

2 Bills 12 145.00

3 Groceries 12 240.00

4 School 2 500.00

5 Miscellaneous 6 233.00

Grand Total:

Actual Annual Savings:

Formulas for Expenditure sheet

We will need to;

1. Calculate the subtotal

2. Calculate the grand total based on sub totals
3. Compute the expected annual savings. The expected annual savings is the
difference between the projected annual income and the budget total amount.
This will be done for the actual income and actual expenditure too.
4. Compute the monthly savings variance
 5. Add a comments row just below the tables. Use the IF functions to display
"You need to minimize your expenses." if the variance is less than zero (0)
else display" Great job sticking to the budget".
6. Use conditional formatting to change the text colour to red if the variance is
less than 0 else change the text colour to green.

Tutorial exercise 2

Write formulas that implement the above scenarios.

Visualizing the data using charts

Charts are a great way of visualizing our data. We will now add a pie chart to our
income sheet for the projected monthly income. The image below shows our data

As marked in the above image our chart should only show the data for

1. Item column
2. Subtotal column

Highlight items 1 to 5 in Item column

Hold Ctrl button on the keyboard and highlight the subtotals from 1 to 5 in subtotals
column.

Your selection should look as shown in the image below

Click on INSERT tab from main menu

 Use the charts ribbon bar, click on the pie chart drop down and select a pie
chart of your choice.
 Your pie chart should now look similar to the one shown below
Tutorial exercise three
Create charts for the actual expenditure, projected income, and actual income

Download the above Excel File

Summary
In this tutorial, we have learnt and applied the knowledge gained in the previous
tutorials. We have also been able to visualize our data using charts.