I've been meaning to do it for a long, long time. But there are always more interesting things on my radar. After updating my copy of Open Office yesterday I started working on a few simple spreadsheets that will greatly improve my understanding of my financial situation. For far too long now I've been making educated (often overly optimistic) guesses based on back of the envelope calculations without the benefit of an envelope.

I suspect that a lot of people operate this way.

When I first moved to California 4+ years ago, I sat down and created a monthly budget spreadsheet. The sticker shock of living here pretty much forced me to do it. But after a few months of feeling my way around I never looked at it again. I don't even know where it is.

This time around, I haven't done the monthly budget yet. Instead I'm getting a handle on assets, income sources (work, book, magazine, stock, other investments), longer term expenses (house payment, wanting to buy a glider). Once I have properly aggregated all of them, I'll then create a monthly budget. That'll probably wait until I'm in the new place, since I don't know what my utilities and insurance will be quite yet.

As with most things in life, this was easier than I thought it'd be. I should have done it ages ago. It took maybe an hour of gathering info and another 20 minutes of data entry and brain-dead simple modeling. The only thing I want to do next is verify a few assumptions with my tax guy.

One of the sheets I've assembled will be really helpful in tracking the major one-time expenses associated with the new place: down payment, moving, carpet, buying a fridge, etc.

It's really surprising how much insight you can get from a bit of quality time with a spreadsheet and some ballpark financial figures. Really. It is. Try it for yourself.

If I'm sufficiently pleased with my workbook of data in a month or two, I may post it here in case anyone else finds it useful. There's bound to be stuff that's specific to my situation, but someone might find it helpful.

Posted by jzawodn at February 17, 2004 09:04 AM

Reader Comments
# Rich said:

Why not just use Quicken?

on February 17, 2004 10:10 AM
# Jeremy C. Wright said:

Will a budget have any actual benefit for you?

Have you read "The Wealthy Barber"? Summarizes my point nicely. If not, I'll send you a copy. It'll open your eyes to the simplicity of being fiscally responsible. Often without the need for overly complex tools which constrict instead of bringing freedom.

on February 17, 2004 10:28 AM
# Jeremy Zawodny said:

Quicken is probably overkill in some respects. Plus I'd have to take time to learn how it thinks rather than working the way I think.

on February 17, 2004 10:54 AM
# Tank said:

Insurance - 30%? Really?

on February 17, 2004 01:10 PM
# Jeremy Zawodny said:

Tank:

The graphic is one I stole from a web site. It has little bearing on my real numbers.

on February 17, 2004 01:12 PM
# halla said:

Dunno if they do it out there, but you might be able to call the utility companies and get them to tell you the average bill rate for the last year there. Also, you might be able to go on a flat billing plan where they average your bill over the year and you pay the average amount instead of having a large bill sometimes and a small bill others. This will help with you trying to keep to a budget.

on February 17, 2004 04:39 PM
# Donncha said:

I started doing this last October when I decided to buy a house and it was the best thing I did at the time.

I have the coming month's planned out but of course they're incomplete - as a new home owner I have very little idea about how much it's really going to cost me! This is all going to go into my "Buying a house in Ireland" post on my blog whenever I get around to it..
As a starter:
1. Incoming cash and salary at the top.
2. List all your fixed outgoings.
3. List your cash-in-hand expenditure. (ATM, broken down into Car, Groceries, Entertainment, Misc, etc)
4. Leave space for one-off outgoings.
5. Total expenditure, and salary left.
6. Next month's starting balance should be this month's closing balance + salary. Do that 12 times and you'll have an (optimistic) value of your savings by year's end.

on February 18, 2004 05:18 AM
# Josh said:

I did this a few years ago and I can't tell you what a difference itís made (along with reading "Rich Dad Poor Dad"). I am looking at getting away from my custom spreadsheets this year and using something like MSFT Money or Quicken...but in any case this is a vital exercise! Let me know if you'd like my spreadsheet templates.

on February 18, 2004 05:30 AM
# Scott Johnson said:

Not meaning to be redundant here, but Quicken is definitely worth the (short) time it takes to learn it. I used it for over 4 years, originally starting out with a DOS version and then moving to a Windows version later. My recent laziness has left Quicken alone in a dusty closet, but it was once a good friend.

With the advent of online banking, Quicken has kept up with the latest of everything. I was always able to download the transactions from the bank to keep records on my PC. And then Quicken would quickly create charts similar to the one above showing my spending for the recent month/year/whatever.

on February 18, 2004 04:11 PM
# pdpawel said:

Gnucash is a great alternative to Quicken, and it supports double-entry accounting which I find indispensible for tracking inflows and outflows.

on February 22, 2004 06:49 AM
# Kathy Paal said:

Nice post. I second the recommendation of The Wealthy Barber, its truly a great budgeting/personal finance book. Both Quicken and MS Money are great programs to help you really see where your money goes each month, assuming you use it. I also recommend that people use check cards over cash, as it makes it easier to track typically, since cash can kinda disappear.

on December 9, 2005 10:42 AM
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