Individual or family budget
A budget is an extremely useful tool for taking control of your finances and is suitable both for planning and for checking the planning against reality. With our free Excel template you can make an individual or family budget quickly and enjoy having an overview of all your finances on a single sheet. We will show you step by step how it works.
Index of contents
1.- Why should you make a Budget?
2.- The 4 simple steps of a budget
2.1. First Step: Choose your tool
2.2. Second Step: Distribute the expenses in different categories
23. Third Step: Assign a budget to each category
2.4. Step Four: Contrast your budget with reality
3.- Budget Financial Explorer: Our free Excel template
3.1. How to make a budget?
3.2. How to contrast your budget with reality?
3.3. What conclusions can we draw from a budget?
4.- The best Apps to manage your personal finances
4.1. Free personal finance apps
4.2. Payment personal finance apps
5.- Make a budget with paper and pencil
6.- Frequently asked questions
A budget is a document (physical or digital) that allows you to keep track (individual / family) of income and expenses with the main objective of maximizing money (personal / family).
At first glance, it may seem old-fashioned to budget. You may associate the word with fat ledgers, but nothing could be further from the truth. There are many good reasons to make a family or individual budget. A budget is a universal tool when it comes to gaining control over your own finances, whether it's to uncover unnecessary spending or save more efficiently.
Have control over personal and family finances
The biggest advantage of making a family or individual Budget and that you should not underestimate, is having control over the state of your finances. Before, you may have had a vague idea of how much you spent and on what. With a Budget, you will suddenly begin to understand your finances, your income and your expenses. If you are constant and check your Budget on a regular basis, you will know in detail where you can reduce expenses or where you can save more.
In addition, making a budget will allow you to:
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Differentiate when an expense is necessary or when it is emotional.
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Prioritize spending on the things you like, make you happy and bring you more on a day-to-day basis.
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Avoid getting into debt (especially avoid bad debt).
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Live calmer knowing that you are saving to create an emergency mattress, which in the future will give you many possibilities.
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Detect how much money you can save each month to achieve your goals, for example,financial freedom.
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Make future forecasts based on the numbers of your budget. (Ex: If you continue with this lifestyle, how long will it take to buy that house or that car that you want?)
A budget will help you to be more conscious when spending money so that you can spend it on what really makes you happy, knowing that it is within your means. If at a time you can't afford a certain expense, you can always set it as a goal, so as long as you're saving for it, you'll be happy thinking that you're working toward your goal.
2.- Los 4 Simple Steps to Your Budget
2.1.- First step: Choose your tool
The way you choose to manage your finances needs to be as simple as possible, and something that doesn't take a lot of work, effort, or time to fill out. The easier it is for you, the easier it will be for you to be constant month by month comparing your budget with your actual expenses.
Fortunately, there are a thousand and one ways to make a budget: either in an App, which becomes a daily companion, with our free Excel template or in the classic way with paper, pencil and a calculator, the selection It is wide. If you feel frustrated with the first one, don't give up immediately and try one of the alternatives, which we just mentioned.
2.2.- Second step:Distribute expenses into different categories
It's smart to separate fixed and variable expenses. Fixed expenses are those that are repeated every month (for example: housing rent) while in variable expenses the amounts differ each month (for example: food) and therefore, the former are usually more difficult to minimize than the latter. Variable expends.
Within the fixed expenses and variable expenses, it is also advisable to divide your expenses into significant categories of a higher level, which group a set of minor expenses. These categories should be individually tailored to your life situation. Young singles often have higher leisure and entertainment expenses than families and it may make sense in this case to add more fields to this category
You can use these categories to organize Your Budget:
Income
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salaries
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rental income
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state aid
Savings
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emergency fund
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Pension plan
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ETFs
Fixed costs
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Housing (eg: Rent, Electricity or Internet)
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Insurance (eg home, life or accident)
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Financial expenses (eg: mortgage, credits or loans)
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Mobility (eg: car leasing or transport subscription)
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Subscriptions (eg: Spotify or mobile contract)
Variable expends
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Common (eg: food or clothing)
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Leisure and entertainment (eg: outings, sports or trips)
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Mobility (eg: gasoline or taxis)
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Others (eg gifts or donations)
2.3.- Third step: Assign a budget to each category
Now it is about assigning to each of the categories an amount of money that reflects your life situation. Assigning money to each category does not mean introducing each and every small expense. Nothing happens if you do not know all your expenses to the cent, because when making a Budget we seek to have an approximate idea of the relationship between your expenses and your income.
Regarding savings, we leave you a piece of advice that we have already learned so much in the book "The richest man in Babylon"as in the book"The path to financial freedom":
Save and invest at least 10% of your income
Regardless of the situation you find yourself in right now, this game is essential for your future; especially if your goal is to live with more financial peace of mind, create an emergency cushion, achieve your goals, or even achieve financial freedom.
2.4.- Fourth step: Contrast your budget with reality
At first, the biggest challenge will probably be updating your Budget on a regular basis. In the first three months in particular, you must enter the numbers in a disciplined manner so that a routine is created and you understand where the money is going month after month.
Think that contrasting your Budget with reality is something positive, as it will help you achieve what you really want in life and live more calmly knowing that what you spend is budgeted and you can afford it._cc781905-5cde -3194-bb3b-136bad5cf58d_
Every beginning is difficult, that is why at Explorador Financiero we want to make it as easy as possible for you and we have created a free Excel template, with which you will be able to make a budget in a very simple way and compare it month by month with reality. Now we are going to guide you step by step through the template!
Enter your income, expenses and what you save
To begin, enter your income, your expenses and the money you save in the different investment products. Excel automatically adds up the expenses for each category.
Screenshot Income / Savings / Expenses
Configure the categories
Change or add more rows within each category and adapt the Excel template to your life and situation. For example, if you are a member of a gym and that type of subscription is not in the subscriptions category, simply add an additional row within that category or change any of the existing cells that you are not going to use._cc781905-5cde-3194 -bb3b-136bad5cf58d_
In case you add a row, don't forget to copy the formula in the "Total" column, so that the sum of that row appears in the annual sum.
Category Settings
At the bottom, Excel shows you the surplus for each month as well as the surplus at the end of the year. If in a month, your expenses and your savings are greater than your income, the cell turns red.
Surplus Screenshot
Complete the template
Once you have filled in the first month, repeat the process with the other months. If any of your income, expenses, or savings don't change over time, you can simply copy and paste those cells into subsequent months.
Nothing happens if you start filling in the template once the year has started, simply enter the data from the month that has not yet started.
Full Quote Screenshot
annual graphical representation
If you go to the "Statistics" sheet, you can see an annual graphic representation of all your income, savings, expenses and surplus. This will allow you to understand exactly how your income, expenses and savings have developed and thus be able to adjust your financial planning accordingly.
Screenshot Graphic Representation of Income / Savings / Expenses and Monthly Surplus
Distribution of expenses month by month
If you scroll down on that same sheet, you will find the graph of the monthly distribution of expenses in the form of a column graph. The columns include both fixed expenses and variable expenses.
Screenshot Monthly distribution of expenses
The easiest way to open our Excel template is with the Microsoft Excel program from Microsoft 365 or Microsoft Office Suite. Mac users who do not have Microsoft 365 can also open the template with "Apple Numbers" or with "OpenOffice Calc" but the graphs in the "Statistics" sheet will not work for them.
Enter your actual income, expenses and savings
Once you have completed your Budget, you can enter your actual data and see how good your planning has been, in which categories you are within the budget and in which you have gone too far. To do this, all you have to do is display the column to the right of the month, which has already ended and for which you want to enter the real data. You can do this by clicking on the '+' symbol that is just above each month. At that moment, a column will be displayed that bears the heading 'Actual accounts (month)'. In the same way as you did with your Budget, enter the actual data in this column.
Monthly contrast between your Budget and the real accounts
If you have completed the previous step, you will find a graph in the "Statistics" sheet at the bottom, which will allow you to visually contrast where you have made a good planning of your Budget and where you have gone over your Budget._cc781905-5cde-3194-bb3b -136bad5cf58d_
Once you have completed your Budget, you will see that the Monthly Surplus is calculated as follows:
Surplus
=
Income
-
Saving
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Fixed costs
Variable expends
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As we said at the beginning, we have set savings as a fixed percentage of the income level of at least 10%. In our example, we've taken that minimum percentage of 10%, so income minus savings will always equal 90% of income. If we chose a savings level of 20% of income, income minus savings would give rise to 80% of income. The first two boxes are reduced to a single box multiplied by the factor (1-percent savings/100). If we call the savings percentage A/100, we are left with the factor (1-A). Fixed expenses and variable expenses can also be combined in a single box, the "Expenses" box. The Surplus can have three possible results:
Surplus
=
(1-A)*
Income
-
Bills
>0
=0
<0
ohPositive!
ohNull!
ohNegative!
(1-A)*
Income
>
Bills
(1-A)*
Income
=
Bills
Bills
Income
>
(1-A)*
-
positive surplus
Perfect! Your lifestyle fits within your financial possibilities and you will have to see if, for example, you want to save or invest more.
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zero surplus
You've nailed! The amount remaining after subtracting savings from income is exactly equal to your expenses. This is the ideal situation that should be repeated one month after another.
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negative surplus
Alert! It seems that you are living beyond your financial means. Do not let panic take over you, but you will have to analyze your situation and make decisions. Start by looking at which category you've slipped into and see if you can cut other expenses in that category. If this isn't possible, see if you can cut expenses from another category to compensate. Here are the questions you should ask yourself in this case:
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Are they exceptional expenses?
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Are they superfluous expenses?
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What steps can you take right now to avoid having a negative budget surplus? Reduce expenses, increase income, etc...
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Is it negative for only one month or on a recurring basis?
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Can it be compensated with positive surpluses from previous months?
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Do you have the resources to avoid bankruptcy? Emergency mattress, savings, etc...
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How long can you continue with negative surpluses without having to ask for a loan?
Depending on the answers to these questions, you will have to take some measures or others. But what is certain is that if you continue like this, you will end up acquiring a credit or loan to maintain that lifestyle and be able to make ends meet, and that is something that we strongly discourage.
These conclusions can be applied to both budgets and actual data. Although it is true that if the surplus is negative when we make the budget, we still have the capacity to react. While if the surplus is negative when we introduce the actual data, only measures can be taken for the future.
If what you want is to always have your Budget in digital format with you, what you are probably looking for is an App. The practical thing about an App is that you can put all your expenses directly on your mobile phone, which saves you a lot of time. Most of the Apps that make Budgets or keep track of your personal finances have a free Demo version with limited options but you can also use their Premium versions by paying a subscription.
4.1. Free personal finance apps
Here is a list of Apps, the download of which is free and also has a fully functional free version, which you can use without having to pay for the paid version.
personal finance app
Manzana
Android
Available in Spanish
Comments
1 money
- Simple and intuitive
- Multiple currencies
- Synchronization with various devices via cloud
English only
- Budget based on the Japanese method of Kakeibo envelopes
- Web version available
- Specially developed for families
- Free version limited in number of accounts, devices and envelopes
- App specially developed for couples
- Connection with your bank account
- No premium version, only accept donations
Money Manager
- Allows you to save receipts with photos of receipts and moments
- Very intuitive graphics
- Possibility of searching for expenses through filters or in the calendar
- In the premium version there is no advertising or account limit
MoneyStats
- Different types of designs
- Data can be imported with a CSV file
- Functions such as synchronization, exchange rates and certain reports are paid
Budget
- Configurable categories
- No premium version, totally free
Sources: Data obtained from the official pages or in the App Store or de each Google Play dated 05.01.2021. Data without guarantee.
4.2. Payment personal finance apps
If you don't mind paying to download the App or a small monthly amount to use the applications without any limitations, you can either pay for the Premium version of the Apps in the previous section or use one of the following Apps.
personal finance app
Manzana
Android
Available in Spanish
Comments
MoneyControl
- Synchronization via Dropbox
- Simple, simple and nice
- Continuous development with free updates
- Free version up to 20 entries per month
- Very intuitive
- Simple and clean designs
- Apple Watch connectivity
- Single payment when downloading the app
- Synchronization of bank accounts
- Portfolios shared and synchronized with various people and devices.
- Free version limited to one account and one budget
English only
- Innovative App with a system productive de ahorro
-Connectivity with all kinds of devices
- Free trial version for one month
Sources: Data obtained from the official pages or in the App Store or de each Google Play dated 05.01.2021. Data without guarantee.
Whether you use our Excel template or an App, we advise you to pay as much as possible with a debit card, direct debit or bank transfer. In this way everything is registered in the bank account and thus at the end of the month it is much easier to enter the real data. If your App allows you to connect your bank account, this task is done automatically.
If you decide not to use an Excel template, App or PC software, you can also create your Budget on paper. This takes a little longer, but if you are consistent it can become a delightful ritual that provides clarity about finances. Other than that, it's cheap, as you basically only need a pen and paper (and in some cases, a calculator). And before computers were invented, it worked great too!
You can also use the typical notebook of a lifetime or an agenda specialized in financial control. On Amazon you have options like thePersonal Finance PlannereitherThe Kakebo account book.
What we do not recommend is to keep thousands of invoice papers to do the accounts at the end of the month. The most likely thing is that you lose half, you don't remember what they were for the other half, and you end up frustrated.