Our Free Downloadable Budgeting Template
The tool I use over and over again in my own financial life and with my clients is a budgeting template. Most of us believe budgeting will be limiting and restrictive, but I’ve actually found the opposite to be true both for myself and for the thousands of people I’ve helped with their money.
Why using a budgeting template is hugely liberating (and not restricting).
When we know what we want to be happening with our money (having a spending plan) and then track where our money is going (following through with that plan), it’s actually hugely liberating.
First, we get to reach our financial goals. And despite popular belief, if we set our goals well, this means we’re getting what we really want. We’ll find freedom in our choices and get to have and experience what we want in life.
The less-expected result of creating and keeping up with a budgeting template is that we can spend money on fun things without feeling guilty. When we don’t have a plan (and therefore don’t know how much to be spending), our non-essential expenses can make us feel guilty.
If I know how much I want to be spending, I can treat myself to a massage or a nice cocktail, knowing it fits in with my broader goals. I’m consciously spending my money and can truly enjoy it. Without a plan we’re often splurging and not enjoying it. That’s not the point.
Long story short, budgets get a bad rep (which is why I’ve chosen to rename them happiness allocations), but they’re an incredibly powerful yet simple tool we can use to dramatically improve our financial lives (and lives in general).
How we came up with our budgeting template.
This budgeting template has been years and years in the making. Through my own money journey and helping thousands of people with their finances, I’ve discovered what works. This budgeting template looks very different from the first spreadsheet I created and is now the template I use for my courses and when I sit down with a client.
Over time, I’ve learned what’s important to include and what’s okay to leave out. We want to make things as simple as they can be and only as complex as they need to be.
Overall, I’ve found this layout works for the majority of people. Overtime I recommend customizing this to work with your lifestyle and spending (more on this below), but at first, I find people have the most success when they start simple. Creating a plan and then tracking it is a new habit, and we want to make it as easy as possible for you to get started.
What I look for in a budgeting template.
In order to account for things that don’t happen on a regular basis and to see the true impact of our spending, it’s really important to plan out the next twelve months (an entire year).
I see a lot of people run into trouble by creating a weekly or monthly budgeting template. Weekly or monthly budgets might work for a little while, but when we have to buy a flight or spend more around the holidays, it throws everything off and we feel as though we’ve lost all the progress we’ve made.
All months aren’t created equal and we need to plan for that.
It’s also important to see our annual totals in order to get a clear picture of where our money is going. A $100 per month expense might seem smaller than a one-time $1,200 expense but over the course of a year, they add up to the exact same amount.
If we are going to be able to make informed choices around our money, we’ll need to take an honest and complete look at where it’s going.
This budgeting template sticks with the most important math, the rest is just noise. The golden rule of personal finance (the only math you really need to know) is total income minus total expenses equals what’s left to allocate for your goals (aka profit).
Total Income - Total Expenses = What’s Available for Your Goals (Profit)
What we left out to keep our budgeting template simple.
In order to keep our budgeting spreadsheet as simple as possible, we left out the bells and whistles.
We don’t have quarterly totals (to most of us, a quarterly total doesn’t mean much). We left out categories as I have found that it’s more beneficial for you to create your own categories based on how you think of your spending.
There aren’t any percentages or subtotals. We want the budgeting template to be easy to manipulate without messing up equations or running the risk of incorrect totals.
How to use our budgeting templates.
There are two stages to using a budgeting template. The first is the planning stage. The planning stage entails mapping out what you expect your income and expenses to look like for the next twelve months.
Start with your income. Each source of income will get its own row. If you get a salary, use the number that actually hits your bank account, not your pre-tax salary divided by twelve. If you are an entrepreneur, freelancer or earn commission, do your best to reasonably estimate (I recommend an educated, conservative guess) what you will earn over the next twelve months.
Next, do the same for each of your expenses. If you get overwhelmed by categories, simplify. For example, instead of listing out breakfast, lunch, dinner, snacks, groceries, and drinks, you can roll it up into one “food” category.
If you need some help to jog your memory (we all do!), look through your monthly bank or credit card statements or keep a money journal.
At this point, you’ll have entered in your total income and expenses by month, and the budgeting template will show you annual totals as well as your expected monthly and annual profit (or lack thereof).
If you don’t like the result at first, that’s okay. Most of us don’t! But once we know what’s happening, we can make adjustments and there’s a lot of power in that.
The second phase of using the budgeting template is tracking what’s actually happening. Is what I planned for happening or even realistic? I like to make a copy of my initial spreadsheet to keep as a reference. Here I track what actually happens as it happens.
For example, in October I may plan to spend $250 on food. I can enter in my food expenses during and at the end of the month to see that I actually spent $300.
If it’s helpful, use different color fonts to denote what’s a plan vs. what actually happened. This is something I learned to do in my investment banking days. Blue indicates it’s my plan (projection) and black font is used to show my reality (what I actually spent).
Customize your budgeting template to make it your own.
I highly recommend adding anything that will be beneficial to you. If you are interested in knowing what your total fixed expenses are, add a subtotal. If it will be helpful for you to know what percentage your rent is of your total income, set that up. If you have an eye for design and want to see beautiful pie charts, add them in.
Without further ado… here’s our free downloadable budgeting template.
In conclusion.
Budgets get a bad rep but creating and maintaining a budgeting template is one of the most valuable personal finance exercises we can do. Not only does it empower us to reach our financial goals, it allows us more joy in the money we do spend and gives us peace of mind. Our budgeting template makes the process as simple as it can be without leaving out the key things we need to know.
We’d love to hear from you. What parts are most helpful to you in your budgeting template? How have you customized it to make it your own?