While I was making a “spending” plan after calculating my monthly income and bills and expenses, I was a little confused about how to allocate spending limits for different categories.
For example, suppose after I spend 1000 in bills and another 1000 in groceries and other expenses every month, I still want to allocate some budget for entertainment like shopping, eating out, movies, adventure and so on. I am trying to come up with an excel document to categorize these spendings so that I can keep track of how much I spent in which area.
So my question is this. How many such categories I should create. I don’t want to create too many categories to make it impossible to manage and neither do I want to have such broad categories that would make it hard to keep track of where the money is being spend.
Anyone one experience in personal finance management?
IMHO, you can categorize them like:
1. Must Haves
2. Could do without
3. Should be Nice
In descending order of importance of course
I generally assign my resources to some broad categories. And then make up sub-categories, or merge existing ones, whenever I feel the need. There is no need to create a perfect system right now. You can change the system to one that suits you over time.
Spend some time to try out various finance management software packages (there are several free ones, and most of the paid ones offer trials).
Hiya! Nice to know you read my blog
You have a nice one too! Look forward to reading it.
As for your question, I don’t think the two responses above are appropriate to your needs.
I, too, use Excel and have been using this for personal budgeting for a few years. My expenditure categories have changed over time and I change them when I see a trend emerging where I spend in more/less categories.
I don’t mind having different categories in my worksheet over the year – I use the worksheet mostly to view on a monthly basis, and sometimes compare categories over the year.
Mine is quite simple. I have one excel doc and many worksheets within it, labelled by month.
I create a table with the days of the month going down and the categories along the top right, with daily totals on the end right of each row, and monthly totals per category at the bottom of the table at the end of each column.
At the bottom of the table, I have a row for ‘budget’ – this is the budget I assign per category. In between the ‘monthly total’ row and the ‘budget’ row, I even have a ‘remainder’ row to indicate if I am over- or under- spending in that category.
If you know how to calculate in excel, the formulas are simple.
My categories are separated by the kinds of bills I pay; petrol; entertainment; clothes; etc…
I have an ‘other’ category for stuff that I don’t usually purchase…such as medicine, for example. If I purchase a gift, this also falls under ‘other’.
You can personalise your categories as you see fit!
It’s quite a simple way of keeping track of your expenditure…I find it’s a good tool to keep in control of your finances and I love using Excel for this!
Hope that helps.
Thanks a lot… thats very simple and straight forward… i will certainly try to adapt this
Glad my comment got through – it was not loading properly when I clicked send.
Good luck!
recently came across mint.com Do check it out.