By Vanessa Papas: MMA/UFC Fighter Chuck Liddell, songwriter Kenny G, famed author John Grisham and musician Mick Jagger are all financial spreadsheet fans. These celebs, who ironically also all studied accountancy, know the value of spreadsheets in managing your money. Most people wake up to go and work, making money yet their bank balance remains the same as it has always been. The challenge with most budgets is that they don’t work as they only focus on typical monthly spending yet excluding the daily coffee, daily lunch and weekly runs to the shops as well as the annual holiday. Spreadsheets have been around for ages and help you to take a detailed look at your finances and then helps you to manage and control your cash. We chat to Hwalani Mabaso, Provincial General Manager at Absa Wealth and Investment Management, on how to make spreadsheets work for you:
Why spreadsheets and tracking expenses is important: A crucial element of managing your personal finances is taking time to track and analyze your income and where it goes. This exercise is quite important as it can uncover money leaks and help you to refrain and allocate your pay cheque efficiently and effectively.
Spreadsheets can curb overspending: If you are not saving or eating up your savings every month and building up more debts, it means that you are overspending. Spreadsheets can assist you to understand the scale of the problem accurately and to come up with tailor-made solutions.
Ten tips for using spreadsheets.
List and write down your fixed expenses: Fixed expenses are the expenses that we may ever month such as rent/Bond, Electricity, rates and taxes and levies. This will assist you to understand how much of your income is left over to invest, save and allocate leisure and entertainment and resulting in more control over your finances.
Reserve least 10 percent of your income every month: Get into the habit of paying yourself first through reserving at least 10 percent of your income. The key here is to save the money and earn some interest over a period of time.
Use spreadsheet to track debts: Tracking your debts can also help you to be conscious of spending and understanding the shortfalls to paying off the debt. It’s important to amortize your debt as soon as possible and try to pay more instalments simultaneously, to reduce the duration of the contract and the interest. In a spreadsheet, you can modify almost everything. That’s important because everyone has their own unique way of thinking about money. Everyone has unique financial goals. Those goals change over time. And only spreadsheets are customisable enough to evolve with them.
Update your spreadsheet frequently: In order for spreadsheets to be effective, it’s important to update the spreadsheets frequently. While it can be tiring to do that. Have financial goals that are clear, is part of the strategy to help you stay on track when the going gets tough.
See also: What’s your money is mine, even debt
Crunching numbers: A recent survey showed the majority of spreadsheet users are more aware of their financial habits as a result of using spreadsheets versus apps. Spreadsheets gave them more control over how they track their finances, were easier and simpler to use than the apps they tried and had better reporting options than they apps they tried.
The bottom line: While spreadsheets will go a long way in assisting you to track income and expenditure it’s vital not to ignore the small expenses. The eating out, coffees and non-essential items that you spend money on. The key is focusing on spending less and saving more.
Get Started: While a spreadsheet can work on paper, it’s best to use a computer programme for efficiency and accuracy. Excel works best. Open up Excel so that you have a blank spreadsheet. Include figures for ‘income’ and ‘expenditure’ (outgoings) and the months over which you want to budget to run, as well as is any sub-headings for the type of income you receive, for example salary, pension, benefits. You need to add types of expenditure such as rent or bond payments, utility bills, shopping, leisure, TV license, rates account, savings and so on. Once you have these headings in your spreadsheet, you can start to put in the calculations so that when you put in figures at a later date. Excel is able to calculate any totals automatically. There are a number of templates on the Internet that can assist you with setting up a spreadsheet that are simple and easy to navigate. Starting with a free template (or even from scratch), a spreadsheet beginner can make a useful budget, money tracker, or other custom tools in less than an hour.