How a Spreadsheet Helps Save Me Big Bucks

Photo (cc) by Francis Bourgouin

The following post comes from Len Penzo at partner site LenPenzo.com.

I’ve been diligently managing my personal finances and tracking household expenses for more than 20 years.

How diligent, you ask?

Well, I can tell you that my cable bill in February 1998 was $8.03, and that I spent $141.16 in 2006 for an annual subscription to the Los Angeles Times.

I can also verify with total certainty that 7 percent of my income in 2007 went toward groceries, and vouch that I spent $88.95 at my local K-Mart in August 2001. Just don’t ask me what for, because I’m not that thorough with my record keeping.

Why tracking expenses is important

Taking the time to track and analyze your income and where it’s going is a crucial element of managing your personal finances. That’s because doing so uncovers hidden money leaks that help you better allocate your resources, thereby ensuring you always get the most out your paycheck.

It makes it easier to set financial goals too.

Of course, prior to tracking your expenses, you have to record them.

While not impossible, trying to track all your cash purchases can be extremely tedious and time-consuming. On the other hand, everything purchased on your credit and debit cards is automatically recorded and available for review online or as part of your monthly billing statements – which is why I use credit cards for as much as I possibly can.

As for keeping tabs on how you spend your money, there are a panoply of options available.

Now, I realize many people are initially attracted to sites like Mint, OneBudget, Adaptu, and MyBudget-Online because their automation features essentially make the job of tracking your money almost effortless. The trouble is, in the world of personal finance I believe too much automation can be a curse. That’s because when money-management tools become too user-friendly, a lot of folks have very little incentive to understand the data being made available to them.

For the financially undisciplined, over time that’s a surefire recipe for failure.

The big advantage of spreadsheets

For me, the more old-school, hands-on approach is the only way to go. I use my own custom-designed Excel spreadsheet because it forces me to actively manage my personal finances. It also gives me more control than using a Web-based site like Mint.

In fact, every January I give my readers a peek at some of that spreadsheet’s top-level graphs and financial breakdowns in my annual State of the Household post.

True, a spreadsheet is not as sexy as automated money-tracking Web-based applications. But it’s the same tried-and-true method I’ve been successfully using to track my income, net worth, and expenses for more than 15 years now.

Here’s just a small portion of the Excel worksheet for my household expenses in 1999…

Although the custom Excel spreadsheet I developed was quite simple in the beginning, it has grown in detail and complexity over the years, with pie charts and graphs that clearly show the results of our household spending and current trending patterns.

Today, my spreadsheet breaks out our household expenses into 13 major categories and 50 subcategories. The major categories include:

  • Loans
  • Utilities
  • Medical and dental
  • Automobile expenses
  • Groceries
  • House expenses (excluding the mortgage)
  • Entertainment
  • Taxes
  • ATM withdrawals

And a few more quick tips…

  • If you’re just starting out, it’s important to make sure you set aside about an hour or so at least once per month for reviewing your checkbook, receipts, and/or credit card statements and recording your expenses in your spreadsheet.
  • By frequently updating your financial spreadsheet, you’ll not only be able to quickly catch any potential errors on your billing statements, but you’ll also keep from falling hopelessly behind on your record-keeping duties.
  • If you’re not an expert in Excel, there’s no need for despair. Microsoft has scores of budgeting worksheet templates for you to download and modify to suit your needs. In fact, their “personal budget worksheet” template has been downloaded more than 3.6 million times.
  • If you’ve never used a spreadsheet, don’t be intimidated – they’re not hard to use! Yes, spreadsheets are extremely powerful tools for those who know how to take advantage of all they have to offer. But for most folks, the basics needed to properly track expenses can be learned in less than 30 minutes.
  • If you don’t want to spend money on a spreadsheet application such as Microsoft Excel, you can try the free equivalent from OpenOffice. I’ve used OpenOffice before and it’s an extremely capable alternative. You can also take advantage of the free personal finance templates provided by Google Docs.
  • Once you’ve effectively disciplined yourself to always spend less than you earn, tracking expenses becomes a viable alternative to budgeting that allows you to focus on optimizing your finances in order to get the most bang for your buck.
  • And last but not least, remember this: In the end, it doesn’t really matter what tool you use. What is important is your commitment to actively manage your finances.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
Here’s the Average Retirement Age in Your State
Here’s the Average Retirement Age in Your State

Are you on track to retire at the same age as most residents of your state?

10 Items Every First-Aid Kit Should Have
10 Items Every First-Aid Kit Should Have

Take control of your health and safety by customizing your own first-aid kit with these Amazon purchases.

10 Ways Anyone Can Earn More Income
10 Ways Anyone Can Earn More Income

Looking for additional cash? Here are a bunch of options that are accessible to anyone with internet access.

8 Secrets of an Expert Thrift Store Shopper
8 Secrets of an Expert Thrift Store Shopper

Here’s how a veteran thrift shopper scores the best deals — and turns a profit from them.

5 Simple Steps to an Awesome Retirement
5 Simple Steps to an Awesome Retirement

The path to your dream retirement begins with these five steps. How many have you already taken?

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
11 Things Retirees Should Always Buy at Costco
11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

11 Senior Discounts for Anyone Age 55 or Older
11 Senior Discounts for Anyone Age 55 or Older

There is no need to wait until you’re 65 to take advantage of so-called “senior” discounts.

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

20 Things That Are Actually Worth Stockpiling
20 Things That Are Actually Worth Stockpiling

You don’t need a year’s supply of toilet paper to survive an outbreak, but consider stocking up on these items.

Over 50? The CDC Says You Need These 4 Vaccines
Over 50? The CDC Says You Need These 4 Vaccines

Fall is the time to schedule vaccines that can keep you healthy — and even save your life.

The 10 Most Commonly Stolen Vehicles in America
The 10 Most Commonly Stolen Vehicles in America

A new model parks atop the list of vehicles that thieves love to pilfer.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

10 Deep Discounts Available on Amazon This Friday
10 Deep Discounts Available on Amazon This Friday

These items are all steeply discounted — but the deals won’t last long.

Never Buy These 10 Things With Your Credit Card
Never Buy These 10 Things With Your Credit Card

Credit cards offer many conveniences and protections, but sometimes it’s simply smarter to keep the plastic tucked away.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

There are easy high-paying majors available in the U.S. — and no bachelor’s degree is required. We’re here to help you find easy degrees that pay well.

8 Surprising Household Items You Can Sell for Fast Cash
8 Surprising Household Items You Can Sell for Fast Cash

Sometimes, the humblest household items are worth the most money.

10 Reasons Why You Should Actually Retire at 62
10 Reasons Why You Should Actually Retire at 62

If you can, here are several good reasons to retire earlier than we’re told to.

13 Amazon Purchases That We Are Loving Right Now
13 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

15 Products You Need — Even If You Didn’t Know It
15 Products You Need — Even If You Didn’t Know It

Discover some must-have products on Amazon that you didn’t even know you were missing.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

26 States That Do Not Tax Social Security Income
26 States That Do Not Tax Social Security Income

These states won’t tax any of your Social Security income — and in some cases, other types of retirement income.

14 Things That Are ‘Free’ With Medicare
14 Things That Are ‘Free’ With Medicare

These services could save you money and help prevent costly health problems.

5 Keys to Making Your Car Last for 200,000 Miles
5 Keys to Making Your Car Last for 200,000 Miles

Pushing your car to 200,000 miles — and beyond — can save you piles of cash. Here’s how to get there.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.