Financial Planning – The first steps




I’ve held back long enough…now it’s time to start to put all this ‘talk’ into action.

In my first post on Emotional Spending, I asked you to monitor your spending….well now we’re putting all the expenses you’ve been writing down into good use. This week we begin setting up your monthly budget! …please calm down…don’t get excited & all start to send me comments at once…

So…let’s begin…


1) Name your document

I’m a big believer in starting a project from back-to-front. Essentially, you determine how you want to end up, and that will let you know how you need to begin. For example, if you decide to go to Spain on holiday, you don’t start off by purchasing a ticket to China.

Name your spreadsheet anything you like, but let it be indicative of where you want to end up once this process begins. See this as the first step to taking control of your finances, and not letting your finances control you. So, don’t feel a sense of dread & don’t put it off until tomorrow. Own it.

2) Name the sheets

For now, you only need to name 1 sheet. This first sheet is where you will enter your monthly expenses and income. Mine is simply titled ‘Budget’ – but feel free to go crazy and name yours whatever you like.

[For those of you that are not experts in Excel, if you open Excel and look towards the bottom of the window it opens in, you will see the titles ‘Sheet1’, ‘Sheet2’, ‘Sheet3’ – these indicate different spreadsheets within your one document. If you double-click on them, you can change the name of the titles.]

3) Create your monthly budget

This is where the fun begins…trust me.

  • List ALL of your monthly income & expenses individually in the first column – Yes, I can hear what you’re thinking…list ALL of your expenses. I also group mine by category. For example, mine are grouped as: Income (Salary, Additional Income), Utilities (Cable, Electricity, Gas), Transportation (Taxi, Oystercard), Food (Groceries, Lunch, Dining Out), Health & Beauty (Hair, Manicure, Pedicure, Toiletries), Savings (Retirement, Savings Account).
  • Enter actual/estimated totals for each individual source of income/expense in the second column – Simply enter what you spend or plan to spend, but be sure it’s for each expense NOT each category. You should also title this column ‘Budget’ – which indicates it’s a guide, not the actual amounts.
  • Begin your calculations (& re-calculations) – Once your amounts are entered in the Budget column, enter the formula to subtract all of your expenses & savings from your income. Now you can begin to adjust your amounts, always looking at your ‘Grand Total’ to make sure you’re not ‘in the hole’ each month. This is where the Emotional Spending advice from my first post comes in use. As you adjust your budget, be honest with yourself about what & how much you spend on the few things that really matter to you. Build everything else (realistically) around those 1-2 things that matter.
  • Enter actual amounts each month – Once you settle on your Budget, in the rest of the columns, title them as November, December, etc [Get the hint…you should start 1 November]. This is where you’ll enter the ACTUAL income and expenses that occur each month. If you realise you missed something, no worries, just add it in. Anything you spend money on should be listed.
  • Monitor your spending habits – I recommend evaluating your expenses every quarter. It allows you to see where you can make better use of your money. For example, years ago, after starting a new job further from home, I realised I was spending as much on public transport as I would if I had a car payment, insurance, fuel & repairs – so I bought a car & got more flexibility & control over when & where I wanted to go – I didn’t have to adhere to train & bus schedules anymore.

Just remember, you can’t lie to the spreadsheet. What you enter is what it calculates, so be honest about what you spend because that’s the first step to financial freedom.

…Coming in November…we’re going to create ‘Sheet2’ …I’m sure you can’t wait to hear what it is…


PH Editor note:

If you don’t know how to put the template together, we can make it even easier for you! If you would like a template sent to you, please email and will send you information about how you can receive one.


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