Free Budgeting Excel Template - The Chic Capitalist

Welcome back friends! In today’s post, I’m sharing my free budgeting excel template. My budgeting excel template was created by yours truly and is an essential part of my personal finance regimen.

Additionally, this post will cover budgeting basics. I’ll teach you 1) what is a budget; 2) why you need a budget; 3) how my budget is designed; and 4) how to customize my free budgeting excel template to fit your own personal financial situation by way of example.

What is a Budget?

According to consumer.gov, a budget is defined as a written plan detailing how much money you plan to make and how much money you plan to spend. Moreover, it shows exactly how you plan to spend your money by breaking out your expenses into various “buckets”.

Of course, these “buckets”, so to speak, can look different depending on your personal circumstances. But to give you an idea, the expense “buckets” I use include things like housing, car, food, discretionary, etc. Further details regarding my categorization system will be discussed in greater detail throughout this post. But, before we dive in, let’s take a moment to chat about the importance of budgeting.

Why Budgeting is Important

You may be sitting there asking yourself, “is this something I really need in my life?”. To which, let me respond by asking, do you have financial goals?

Financial Goals 💰

Financial goals may include any of the following:

Paying off debt
Setting aside an emergency fund
Buying a car
Buying a house
Having a wedding
Taking a vacation
Paying for your kids to attend college
Retiring
Giving generously to charity
Financially setting your children up for generations to come
And more!!!

Does any one of these ring true to you? I’m sure the answer is a resounding YES! If not, you may need to see a doctor because I’m not sure you’re human.

Everyone has financial goals! And budgeting enables you to achieve your financial goals through encouraging financial mindfulness. Sure, it’s not a perfect science, but if you understand how much you can spend and how you’re spending your money, it becomes a whole lot easier to live within your means and set a course to achieving your financial goals.

For those of you following my journey through this blog, you probably already know that I advocate for practicing fiscal responsibility. It’s something I’ve struggled with at certain points in my life. I’ve dedicated whole sections of my blog to it, including Stock Pick vs. Discretionary and That Cost What. Check out these other blog posts for other helpful finance-related content.

How to Create a Budget

Returning back to our budget discussion at hand, I now want to share how I came up with my excel budgeting template.

The approach I use to budgeting most accurately reflects an income statement. Income statements are among the main financial statements used by businesses to report financial results. Although not entirely the same, we’ll follow the same basic outline:

And for our purposes, we’ll use the cash method of accounting to create our budget. This means, we’ll only record cash that comes in and cash that goes out. So, for example, say we just spent $200 on groceries and used a credit card to pay. Our credit card has a cutoff billing date sometime next month, meaning we will not pay the credit card bill until the following month. Because of this, there is no cash outflow from this charge in the current month. And as such, we will not include it as an expense in the current month. We will, of course, include it in our budget during that later month when it’s paid.

Based on this model, we’ll forecast out our income and expenses for an entire year. Please note that a forecast reflects our best guesses. Actual results could (and will!) differ. I recommend updating the budget for actual results as the year progresses to see how you’re tracking against your expectations. Are you saving more money than anticipated or less? If you’re saving less, go back to your original budget and ask yourself 2 questions:

1. Were my initial assumptions realistic?

2. Why am I spending more than anticipated?

Once you assess your answers to the above questions, it may be worthwhile to go back and update your budget or reflect on any necessary changes you’ll need to make to spending habits.

Budgeting Excel Template

Here’s my free, easy-to-use budgeting excel template:

Please note that the budgeting excel template is intellectual property of The Chic Capitalist, LLC. It is for your information and personal use only. Please review the Terms and Conditions Policy for more information.

An Example of How to Use The Budgeting Excel Template

So, I fully understand building out your own personal budget from scratch can be overwhelming! I’ll try making it a bit easier by walking through an example using my budgeting excel template.

Let’s help our fictional character, Ralph, build out his budget. Ralph wants to save for his retirement. And to retire comfortably, he’s calculated that he needs $2,000 in savings every month. Ralph has the following financial situation:

Income Transactions

His after-tax paycheck is $2,000, paid twice a month
He receives after-tax interest of $10 a month
He receives after-tax dividends of $50 a month
Ralph usually sells a small portion of his stock portfolio in December and anticipates having a realized capital gain of about $1,000 after-tax
He usually receives $100 from his grandma for his birthday in July and again for the holidays in December
He rents out his condo for $1,500 a month, but knows his tenant will be moving out in July and he anticipates one month vacancy then
Ralph also receives royalties on a previous business venture of about $200 a month during the company’s busy season from April – August. No royalty payments are received during the rest of the year.

Expense Transactions

Ralph has rent payments of $1,200 a month
His bills for phone, internet, and heating/cooling are $250 a month
He pays property taxes on his condo (his rental property) of $1,100 due in January, April, July, and October
Ralph’s food costs are $300 a month
His car loan plus the cost of gas are $700 a month
He spends $300 a month on clothes, since he loves looking good, except in November he spends an additional $500 shopping Black Friday deals
Thankfully, Ralph already paid off his student loan payments and doesn’t have kids’ tuition payments
Ralph has a lot of friends and spends about $100 a month on gifts
He also plans to adopt a new puppy in December that he anticipates will cost him $375 a month

Ralph's Budget Using My Budgeting Excel Template:

Based on this information, Ralph’s budget is shown as follows:

As you can see, most of the inputs you can plug directly into the excel budgeting template. However, a few transactions require manual adjustments. Manual adjustments include:

1) specifying the months for the realized gains on the “START HERE – INCOME” tab;

2) specifying no rental income for July on the “START HERE – INCOME” tab;

3) deleting out the royalty payments during the months of January – March and September – December on the “BUDGET” tab;

4) adjusting the property taxes to show $1,100 only for the months January, April, July, and October on the “BUDGET” tab;

5) Adjusting his discretionary spending to reflect $800, instead of $300, for the month of November on the “BUDGET” tab;

6) Deleting out the $375 during January – November for puppy-related expenses on the “BUDGET” tab;

Also, it’s worth noting that there are error checks built in. So, for example, if you answer “yes” to the earned income question, but do not have any amounts entered for the months January – December of the income input tab, you’ll receive an error message. Furthermore, you’ll receive the error message if you input a negative number. All amounts should be entered as positive values.

Takeaways from Ralph's Budget Example

Now that we’re finished creating Ralph’s budget, let’s go back to review and assess. As you might recall, before we started the budget process, I mentioned that Ralph needs $2,000 a month, or $24,000 a year, in savings to achieve his retirement goals.

Unfortunately, he’s projected to fall short of his savings goal in January, April, July, and October. Wah-wah! Despite this, he’s projected to meet his savings goal on an annual basis. Based on Ralph’s projected budget, he will have saved over $29,000 over the course of the year. More than $5,000 more than he had hoped to have!

Also, if you’ve been paying attention, you would have noticed that he’s required to pay his property taxes during those 4 months he failed to meet his savings goals. To prepare for these expenses, he may choose to set aside 1/12 of the total $4,400 annual amount each month. So, instead of budgeting for $1,100 for those 4 months only, Ralph may decide to set aside $366.67 for each of the 12 months. This aligns with the accrual basis of accounting, which I know we said we wouldn’t use. But, on a case by case basis, such as this one, it may be worthwhile to follow the accrual method.

Will You Be Using My Budgeting Excel Template?

Hopefully you found this post useful! Will you be using my budgeting excel template going forward?

Again, to download a copy of my free budgeting excel template, please click the button below:

If you found this budgeting excel template useful, can I ask that you share this post with a friend? I’m on a mission to encourage others to live a fiscally responsible life, so we can all prosper!

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Free Budgeting Excel Template – Trust Me, You Need This!

What is a Budget?