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Making a Budget

How much are you Spending?

It can be hard to get a handle on your expenditures and trim the fat, so to speak, if you don't know how much is going out. You can start by listing all your recurring expenses.

It is very helpful to use a spreadsheet to do this since it is much easier to run some simple statistics and make some graphs when you have the information digitally rather than a pile of bills and receipts!

Create a spreadsheet with each month in Column A. Across the top row place headers indicating each of your monthly or once-a-year (or twice-a-year) expenses. See below for an example spreadsheet with some random values filled in for expenses.

Think about what you spend money on and make a column for each. Go back and look at previous utility bills to fill in historical values. Some items you might include are:

  1. Water/City Bill
  2. Power/Electricity Bill
  3. Natural Gas Bill
  4. Automobile Gas Fillups (in that month)
  5. Car Insurance
  6. Car License/Registration
  7. House Insurance (may not apply if you have a mortgage)
  8. House Taxes (may not apply if you have a mortgage)
  9. Mortgage Payment (unless you own your own home)
  10. Credit Card Bill (if you are paying it off)
  11. Memberships
  12. Meals/Dining Out/Grocery Bill
  13. Phone Bill
  14. Internet Bill
  15. TV (Cable/Dish/etc) Bill
You may have others or some of the above may not apply. Keep the items that are recurring monthly expenses in adjacent columns and keep items that occur randomly through the year in another set of adjacent columns. Examples of random expenses might be memberships, car registration, house taxes, house insurance, etc.

Next, add up the monthly and the random expenses into their own columns. For example, if columns B thru J are monthly and columns K thru Q are expenses that happen only at various times in the year, then, in column R you will want the sum of columns B thru J and in S the sum of columns K thru Q. Row 1 is your header row with the information indicating what is in each column. In Cell R2, type =sum(b2:j2) and in S2 type =sum(k2:q2). These two formulas will add up your monthly and your random expenses for the first row of values. In column T, type =(r2+s2) You can then copy and paste these three cells down the column so that you get totals for each of your months.

Since expenses vary over the year, it is good to look at the average over a period of 12 months. If you look at a series of 12 month averages, you can see if there are trends in your spending, are you spending more as time goes by or less? This will help you see if your spending habits are becoming more conservative. If your record of purchases starts in January 2013, in December of 2013 you would have a full 12 months of data. So, now, in Cell U13 you could use the formula =average(r2:r13) (assuming that column R holds your monthly totals). Similarly, in Cell V13 you could use the formula =average(s2:s13) to get an average of your random spending over the last 12 months. Finally, Cell W13 would contain the formula =u13+v13 to obtain the 12-month average of all your expenses (both the monthly and random ones over the course of a year).

Now, if you copy those three cells down to the rest of the rows, you can see what your moving 12-month average spending is. So, Cell U14 would be the average of the monthly expenses from February 2013 thru January 2014, Cell U15 would be the average of the monthly expenses from March 2013 thru February 2014, etc.

Fill in the values for each expense as it occurs and after some time you'll be able to determine an average monthly value that you can use for future occurences. From this you can see how much you'll be needing each month and as you trim your spending you can see the effect. The spreadsheet above shows some general (random actually) values used for each category, yours will obviously be different.

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