If the thought of budgeting sends shivers up your spine and makes you want to hide, it may be time to rethink your position. A budget should not be viewed as a set of handcuffs that limits your spending in certain categories, or it will be doomed to fail. Budgeting should be used to examine spending habits. Often awareness of one's habits leads to spending adjustments that provide a more satisfying use of resources.
With a budget in place you can more easily examine your need for liquidity. A budget can pinpoint periods when you will be spending more than you are earning, giving you time to make sure that cash is available. A budget will also allow you to make a more reasonable estimate of the amount of money to set aside should you or your spouse lose your source of income.
If you are implementing a budget for the first time, it is recommended that you first track all of your expenses for three to six months before you try to allocate your funds. It is best to avoid paying for things in cash during this period as it is difficult to keep track of how much is spent on what. If you need cash, experts recommend cashing a check and noting the purpose on the check.
After you set up your budget elements, you should still keep track of your expenditures to see whether you are deviating from your goals. A sound budget should allow you to get a handle on your spending and help you save for long-term financial goals.
Income data is entered in rows 1 through 29, while expense data is entered in rows 32 through 139. The savings(deficit) line in row 143 simply subtracts total expenses from total income to determine for any given month if you will have money left over or have to dip into your savings. Entering income data should be done on a pre-tax basis.
The expense side of the worksheet allows you to enter tax information. For those not familiar with the FICA (Social Security) tax rates: In 1991 the rate is 7.65% for income up to $53,400 and 1.4% for income earned between $53,400 and $125,000. The tax programs listed on pages 12 and 13 may help you estimate your tax liabilities.
The budget template is broken down into monthly segments, with columns AN and AO providing a total for the year. Two columns of data are used for each month: The first column stores the dollar amount while the second column automatically calculates the percentage of total income this value represents.
The spreadsheet template is designed to provide very specific line items-- some that you may never use. You can simply ignore the categories that do not apply or, if you are knowledgeable about spreadsheet operation, you can delete the lines you do not need. If you delete lines, however, carefully check that the total income and total expenses lines are referring to the correct cells. A number of "other" category lines have been thrown in to allow you to enter items not expressly covered by the worksheet.
Constructing the Spreadsheet
After the labels have been entered you should enter the formulas necessary for the first month. The formulas in column D add up the totals for each category. Categories with only one data element do not have a subtotal calculation. The amount of $1,000 was intentionally entered for each category because it can be quickly added to check the accuracy of the formulas. Only the totals for income and expenses might require a calculator to check the math
The formulas in column E calculate the percentage of the total income each item in column D represents. Using the absolute reference ($) in the spreadsheet formulas, it is possible to enter a formula once and copy it to all the other necessary locations in the worksheet. In cell E4 the formula +D4/D$30 tells Lotus 1-23 that as you copy the formula to cell E5 it should change D4 to D5 but keep the reference to cell D30 (total income) the same. A dollar sign (the absolute reference sign) was placed only before the row indicator and not the column indicator because as we copy the formula from cell E4 to H4 we want the formula to reference the total income for the month of February in cell G30 and not that of January in cell D30.
