Over the past 6 years, I've fine-tuned a spreadsheet that has completely changed my finances

Budgets Are Sexy

Hey guys! Out at the beach this week, but as promised I’ve got a handful of killer guest articles for you starting with this one – on how a reader completely changed his finances around by building out an impressive spreadsheet!

He drops screenshots of it, as well as descriptions of what each of the twelve tabs do (yes, 12!!) and it’s all pretty amazing stuff. He writes:

I would like to explore the reasons why I focus on my financial world, and what I’ve learned along the way.

For me, it began when I wanted to spend a substantial amount of money every month for 3 years and I did not know if I could float it.

I graduated as an engineer in 2007, and after 2 years of designing commercial HVAC systems I decided I wanted to shift career paths and move into business by getting an MBA at a local university. It would cost $400/mo for around 3 years. I did not track my expenses at the time, and I had no real clue if I had room in my budget for it or not. I was desperate for information so I could better manage my money.

During my MBA program, the most important thing I learned was that you can only manage things which you measure. If you do not measure, there is no feedback to improve upon.

I researched online and ended up at Crown Financial which got me recording every expense for a month to decide whether I could cut enough out of my budget to add the MBA program in.

I was making about $50,000 at the time. I was single, visiting restaurants with friends frequently, and spent a good deal of my money on pocket knives and frivolous things that did not improve my life, nor make me happy. I wanted to start the MBA program as soon as possible and I could not do these things immediately because I was not managing my money well. This made me upset, and I became determined to become a better money manager.

The reason I focus on my finances is because I want to spend my money on things I value, and to do that I need to manage the money and know where it’s going. I don’t want to spend $0 dollars each month, but I want every dollar spent to go towards things I enjoy. That was the ground breaking epiphany that hit me years after I started getting serious about my financial state.

After a month of recording every expense, I came up with a spreadsheet that let me track things easier than writing them down on graph paper. I started to actually enjoy inputting my receipts into the excel spreadsheet and balancing it with what my bank accounts said. All in an attempt to be a good steward of my wealth and use it in better ways.

After I determined I could do the MBA program, it became even more important for me to continually track my income and expenses since my fluff income was eliminated.

This spreadsheet slowly evolved over the last 6 years. At first it was just a budget template. Now it is a massive workbook that has all of my critical updated information, and is extremely useful to me when making financial decisions.

I started out just wanting to make decisions wisely. Now I open my dashboard and strive to increase my net worth monthly, and make decisions that help it increase faster, instead of only making decisions based on whether I can fit things into my budget or not.

I was single when this started, and now I am financially responsible for 4 young children and a homemaker wife. Knowing where our money is going is security for us. We can anticipate our future and plan accordingly. Our plan is never exactly correct, but having a plan is important and measuring our spending has been critical to actually owning our decisions.

My spreadsheet has 12 major tabs that are used regularly.

Here is a brief breakdown of each, accompanied with a screenshot to see how it looks in action.

Tab #1: Dashboard

This sheet lets me look at my net worth, my account values, and my current budget state. Below the chart is a net worth tracking area I update monthly after I pay my mortgage.

Tab #2: Checkbook

I input every expense into this sheet and reconcile it with my online accounts daily around lunch time. It gets more difficult to reconcile the longer I wait. I track our budget categories weekly, and close out the week on Thursday night when my wife and I discuss the week ahead.

Tab #3: Budget

Figuring out how to keep track of monthly and annual payments this way has been huge for helping me budget accurately. You can see items 4 and 5 are monthly and annual Bigs (they are detailed above)