Budgets are a concept I still struggle with. Funny. A personal finance blogger shouldn’t have any qualms over budgets. And yet I’ve read from the most frugal of bloggers that one should NOT budget. Because if you do, you are basically creating runways of expense where it’s expected money will be spent.
I’m curious if I’d actually save more money, AND be further along the early retirement path, if I just chucked the budget spreadsheet altogether. But then…
I see spreadsheets in my sleep
Admittedly, I am a spreadsheet addict. Not the type that lives and breathes macros and fancy pivot tables mind you. Nope. I just get excited about basic formulas and figures in nice, tidy cells.
I can sit and play with the cell shades, borders, and fonts and wonder what foothills and idyllic streams my early retired blogger friends are hiking-by at the moment. Because naturally, I manage my budget at work.
(That’s a little tip for you by the way. Just remember to email a copy of your budget to your personal email account on a regular schedule, in case something ominous happens.)
The best spreadsheet template for maintaining your budget
If anything, I’d argue to keep it simple when it comes to tracking your income and expenses. I’ve refined this spreadsheet model over the course of twenty years.
It’s a little fascinating to think that this template has evolved over that time, from THE SAME FILE, spanning many versions of Microsoft Excel. How this thing hasn’t become corrupted by now I’ll never know…
Let’s take a peak!
Don’t freak out. I wish I made as much money as what’s shown in “Paycheck-Net”. The rest is pretty close to my actual household income. Our savings rate is actually closer to 70%, but the “Stash Rate” formula isn’t factoring in our mortgage principal and 401K / HSA contributions.
The expenses are the real-deal. Yes, we pay a bonus to our nanny. Retention is a good thing when you’re trying to find reliable child care.
Oh yeah. Child-care. This expense rocks your budget big time. Another post for another day..
How I use this handy ledger to save money
The most useful aspect of this budget template is that I can see exactly where our money is going on a monthly basis. Each and every monthly bill is up for scrutiny. I open this .xls bad boy every single day at the office and often keep it open in the background…
(Unless I’m hosting a WebEx meeting of course. Yes, I made the mistake a couple years ago of hitting the old “share screen” button without knowing it, and about six other colleagues got a five minute review of my personal finances while I fiddled with my phone. Idiot.)
Managing for the peaks and valleys throughout the year
A relatively recent addition to the template helps me plan for monthly fluctuations in income and expense. Rarely does anyone have a budget where each month has the same inflows and outflows. I kind of think of this as the “not getting caught with yer pants down” section:
There are spikes in the “Gross” columns to account for bumps in your normal pay. An annual bonus in February is one. And also, in January and July, the sale of six months of employee stock purchase plan stock.
I use the “Scheduled hits” column to track larger schedule expenses throughout the year, to plan for them and ensure I’m keeping enough in the old checking account to cover the biggie bills. Rocket science, right?
Net Worth It?
Now for the money porn. I understand a lot of folks really care deeply about net worth and I admit I care somewhat too. That said, I still want you to focus on cash flow first. Here is what the simple asset vs. liability section of my budget looks like.
The one real number in there is the mortgage amount left on the primary residence. It’s our main focus right now to pay that sucker off, as part of the master plan. Still feels like we’re only at Base Camp staring up at the Hilary Step.
My net worth is not too terribly far off from the one depicted above. Maybe down the road I’ll grow a pair and share the real deal. Just not quite ready yet. Still-too-shy-to-ask-you-to-the-prom kind of thing.
If you want it
I’m more than happy to share the full .xls template I’ve walked us through above. Reach out to me in the comments or contact me section of the blog.
There are additional tabs in the spreadsheet I use to track actual expenses throughout the year, including charitable donations. I also have a few special “early retirement planning” tabs to help me play out scenarios for maintaining a certain income between the time I retire early and age 60.
Have a great weekend, good readers! And please do take a break from staring at spreadsheets to hike those hills (or walk around the block.)