Personal Budget Planning

With the year coming to a rapid end I find myself reflecting on the events that unfolded, but more importantly I'm thinking about the future. New years resolutions are not something I'm a big fan of. However I do find myself wanting to set better goals for myself, specifically in regards to my money spending habits. Over the past year and a half or so I've developed a system that seems to be working quite well for me. So I thought I would share my secrets and hopefully get some feedback on what works for you.

Keep it simple

I've tried close to half a dozen budget programs over the years from Microsoft Money to Mint.com to YNAB and take my word for it, it's better to keep it simple! All of the various programs and methods I've tried over the years were simply too complex for me – They tried to do too much in my opinion. The end result was that I dreaded updating the budget, so I would procrastinate and it wouldn't get done. I don't need my personal budgeting program to tell me the futures price of corn in the Philippines. Maybe you do, that's cool, but I don't.

I do all of my banking online, and so for me a simple online spreadsheet (with the right setup) is all I need. I currently use Google Docs. I spend maybe 5 minutes once or twice a week and I'm good to go. Keeping it online means that I can update it at work (during breaks), and I can share it with my wife so she can see and update it whenever she wants to as well.

I was planning on explaining all the formulas and settings I created to make the spreadsheet do what it does, but I think that might be a little TL;DR for some people. So instead I created a template you can use if you want to check it out.

Click on the image below

You'll notice that the ledger has a drop down list of all the categories. As you fill out the ledger, the Actual column in the budget will automatically update and as a result so will the Balance column. To me this is the simplest way to keep track of my money. Every couple of days I log into my bank and update my budget from transactions that have cleared (I don't fill in pending transactions because the amounts and dates can change after they're posted).

This spreadsheet gives me a ton of flexibility and accountability. I can quickly see if I'm overspending in one category and make minor adjustments to the budget as I go. Categories like Groceries for example are variable and will almost always end up over budget (at least the way I set things up). When that happens I just subtract what I need from another category and add it to the over budget one until everything zeroes out again.

You may notice that I don't have any due dates on my categories. To me due dates are an unneeded complexity. I pretty much know when things are due, but more importantly I maintain a half months worth of income as a buffer in my account. That way I don't have to worry about not buy groceries the week I pay rent and stuff like that.

At the end of each month I make sure everything zeros out, which sometimes means borrowing from savings, but the goal is to have a positive balance that I transfer to savings (you can do more complex things like buy stocks if you want but I'm not that fancy yet). After it all checks out I copy the tab, rename the new tab to the current month, delete the ledger, and adjust the budget if I need to. And at the end of the year I copy the entire spreadsheet, save one copy to an archive folder, and clear out the other copy for the new year.

That's pretty much it. It's simple, fast, and easy (TWSS). What kind of personal budgeting system do you use? How has it helped you? Is it to complicated? Not enough features? Let me know, or blog about it yourself. I'm curious what others do with their finances.

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How it Works – TL;DR

If you do actually plan on using this there's a couple things you'll need to be aware of. When you add or remove categories from the budget or when you add new rows to the ledger, in order to get the drop down to work, you'll need to do the following:

1. Select the first (top) B cell in the ledger section
2. Right click on the selected cell and choose Data validation...
3. In the Cell range field put <cell_number>:B (where <cell_number> is the top B cell in the ledger) for example B22:B Adding the :B to the selection will make sure that all the B cells in the ledger will have the drop down, especially if you just added new rows.
4. In the Criteria field make sure all the categories in the budget are selected
5. Click Save and you should be good to go

If you want to add new categories than just right click on one of the row numbers on the left and add a row, then copy one of the existing category rows into the new row and update the category name. The formulas are all relative so you shouldn't need to mess with them. Enjoy!