A planned life is a secure life. We love to plan our life. But most often it does not get along with our plans. We plan again considering the mistakes done the previous time. In our life, we make a household budget to lead our life in a planned way. Here, I am going to explain the procedure of how to make a household budget in Excel.
This is the overview of a household budget.
Introduction to Household Budget
A household budget is a financial plan that helps you keep track of your income and expenses on a monthly or yearly basis. It is a record of all the money you earn and spends in a given time, and it can help you make informed decisions about your finances.
A household budget typically includes all sources of income, such as salaries, bonuses, and investment income, as well as all expenses, such as rent or mortgage payments, utilities, groceries, transportation, entertainment, and savings. By creating and sticking to a budget, you can ensure that you live within your means and allocate your resources in a way that aligns with your financial goals.
How to Make a Household Budget in Excel: With Easy Steps
Creating a personal budget can be tough, especially if you don’t use budgeting tools often. But you can make it easier by using Excel. This tutorial will guide you through the process of setting up an Excel budget that you can adjust to suit your needs, no matter how simple or complex your budgeting requirements are.
Step 1: Set Time Period of Budget
The time period of a household budget can vary based on an individual’s needs and preferences, ranging from a monthly budget to a yearly budget or even longer.
In our example, we will have a monthly budget. Hence, the time period will be 1 month. Let’s assume that it is January 2023.
Step 2: Categorize Income Sources
Next, we have listed some common income sources in our budget. The list is below (column B).
Step 3: Classify Expenses
The income sources are followed by the expense sources. There are some broad expense categories like Necessary Expenses (column C), Occasional Expenses (column D), Regular Repayments (column E), etc. Under each category, you will find sub-categories. The list looks somewhat like this.
Step 4: Compare Projected Incomes and Actual Incomes
The next step is to record the actual income.
- At the beginning of a time period, you will set a projected income (column C) from all your income sources.
- Then, you should record your actual income (column D) against these projected incomes.
See the screenshot below to know what it looks like.
Next, we will calculate the subtotals. We will use the SUM function to perform this task.
- Write down the following formula in C12 >> press ENTER.
- In a similar fashion calculate the subtotal of Actual Income. The formula in D12 is
See the screenshot below for the subtotals.
Now, I will compare the projected and actual income. The subtraction of projected income from the actual income will give me the desired result.
- So, write down the formula in E7 >> press ENTER >> use the Fill Handle tool to AutoFill up to E12.
Step 5: Compare Projected Expenses and Actual Expenses
The expense-tracking immediately follows the income-tracking.
- You have to record your expenses once you are done with recording your income. This is what your budget looks like after recording the expenses.
Please note that I have demonstrated only Necessary and Occasional expenses. There are some categories too in the Excel file attached to this article.
- Next comes the calculation of the subtotals for the expenses. The process is similar to the previous step. For example, the formula in C22 is
- Now, I will find out the difference between the actual expenses and the projected expenses. The process is, again, similar to the previous step and requires no repetition.
Step 6: Calculate Income & Expense for Specified Time Period
Now, I will summarize the monthly household budget.
- First, let’s calculate the projected and actual income. We will get them from the “Monthly Household Budget” sheet. To get these values, write down the formula in C7 >> press ENTER.
='Monthly Household Budget'!C12
- Similarly, the formula in C8 is,
='Monthly Household Budget'!D12
The screenshot shows the results.
Next, I will get the values of the projected income and expenses. To do so,
- Go to D7 and write down the formula >> press ENTER.
='Monthly Household Budget'!C22+'Monthly Household Budget'!C33+'Monthly Household Budget'!C45+'Monthly Household Budget'!C54+'Monthly Household Budget'!C61+'Monthly Household Budget'!C67
- Similarly, the formula in D8 is,
='Monthly Household Budget'!D22+'Monthly Household Budget'!D33+'Monthly Household Budget'!D45+'Monthly Household Budget'!D54+'Monthly Household Budget'!D61+'Monthly Household Budget'!D67
See the screenshot below for the outputs.
Step 7: Highlight Key Information
Now, I will highlight some key information from the budget above. I will find out,
- The difference between the actual income and projected income.
- The difference between the actual expenses and projected expenses.
- The remaining balances.
The difference can be calculated by subtracting the actual values from the projected ones. For example, to get the difference between the actual income and projected income,
- Go to cell C9 >> write down the following formula >> press ENTER
- Similarly, I got the difference between the actual and projected expenses.
The summary contains 3 balance parameters. These are,
- Projected Balance ( subtraction of the projected Expense from the projected Income)
- Actual Balance ( subtraction of the actual Expense from the actual Income)
- The difference in Balances ( subtraction of the Expense Difference from the Income Difference)
To get these values,
- Write down the following formula in E7 >> press ENTER >> use the Fill Handle to AutoFill up to E9.
- Then, highlight the key information as you like.
Read more: How to Create a Personal Budget in Excel
Valuable Insights to Get from Household Budget in Excel
The purpose of creating and maintaining a personal budget is to control your financial activities. With its help, you can track your income and expenditure, get to know what expenses you are making too much, etc. Let’s use this budget to gain such insights.
Analyze Projected and Actual Income from Income Sources
You can analyze your projected and actual income from different income sources. For example, if you look closely, you will see that you earned $50 less than the projected income in the month of January 2023.
Reduce Expenses from Projected and Actual Expense Profile
Your personal budget is a great tool that you can capitalize on to reduce your expenses. For instance, you have used an excess of oil worth around $74 this month. So maybe it’s high time you controlled the use of personal vehicles.
Additional Feature: Track Your Savings in Excel Household Budget
You can use a budget to record your savings too. This will make your budget more informative and help track your savings. I have added a new sheet in the Excel file to record the savings.
How to Extend Monthly Household Budget to Make Yearly Household Budget
As mentioned earlier, the budget can be a monthly or a yearly one. Once we make a monthly household budget, we can easily extend the budget and get a yearly one. In this section, I will discuss 2 different ways to do so. These are:
- To create separate sheets for each month.
- To make a budget in one master sheet.
Create Separate Sheets for Each Month
The first method is the creation of separate sheets for each month. The screenshot below is an example of how it can be done.
Make Household Budget in One Master Sheet
The next method is the creation of a master sheet. In the sheet, you will have all the incomes and expenses occurring over the year.
Read More: How to Make a Family Budget in Excel
How to Use Excel Built-in Templates to Create a Household Budget
Excel has so many templates for budgeting. If you want to use those templates then,
- Go to the File.
- Then, select New >> Type “household budget” in the search box >> Select a template you like.
- Select “Create” from the next window.
- Excel will end up creating a new budget for you.
Frequently Asked Questions
1. Why should I use Excel to create a household budget?
Answer: Excel is a powerful tool for creating and managing budgets. It allows you to organize your expenses and income, make calculations, and create graphs and charts to help you visualize your financial situation.
2. How often should I update my household budget in Excel?
Answer: It’s a good idea to update your budget on a regular basis, such as monthly or quarterly, to ensure that it accurately reflects your income and expenses.
Download Practice Workbook
You can download this sample personal budget and practice.
I have tried to simply explain how to make a household budget in Excel. It would be a matter of great pleasure for me if this article could help any Excel user even a little. For any further queries, comment below.