A good place to start the process of introducing you to our financial picture is to give you the lens in which we view our finances. I have tried many different methods to track, maintain, and develop our financial picture into a dynamic up-to-date tool to help us make decisions concerning how our money is spent. Below is a list of tools we use weekly:
- Internet banking/billing portals
- E-mail to discuss finances with siblings
- Skype for same (Can share desktop with other people so they can review the same documents you are at the same time)
Now I have tried other products (Quicken and Mint.com) but have found them both severely lacking the tools to refine my financial picture down to the detail I prefer. Essentially, in the amount of time it would have taken me to learn how to operate and manipulate Quicken or Mint.com I was able to create all of the functionality I wanted into an Excel workbook. The beauty is that I never have to relearn a new update or system. If I do not like something or if I am interested in what changing this number would do to these all I have to do is change it and its done.
The toughest part in creating your own budgeting/finance program in Excel is just starting. What I did was one day in February of 2009 I sat down at my computer and just started creating columns with headers. I started with what I am going to call the holy trinity of personal finances (which someone almost certainly has coined before):
- Revenue (Money coming in)
- Expenses (Money going out)
- Dashboard (Money coming in – Money going out)
So with that basic set-up you have the foundation to go further. For example, line items of particular Revenues (Warren’s salary, B’s Salary, Reimbursement Checks, Tax refunds, etc) and particular Expenses (Fixed Expenses, Entertainment, Restaurants, Online, Stores, etc). I ended up taking my expenses down one more level putting particular line items. For example:
- Expenses – Restaurants – McDonalds
I would now be able to tell EXACTLY how much I spent at McDonalds every month in 2009, which makes you sad when you realize you give them $200 + annually.
In my next post I will give an out-dated example of one of my Excel sheet screenshots and give a basic overview of how to mimic it if you feel it could help you get financially on track. (I have helped a co-worker using my Excel template and she has seen great results! Never underestimate the power of knowledge. When you know where your money is going you are a much better steward of your dollars!)