Spending money without a budget, or a sense of saving is as dangerous as driving without a seat belt. You are simply living without taking stock of what you are doing, or how you are living your life. As such, it is always wise to have a personal cash management system.
Budgeting is actually the most basic and elementary tool that can help manage your money. A personal finance spreadsheet is simply an excel spreadsheet that outlines how much money you are bringing in, and how you are spending it.
The beauty of this is that it clearly shows you how much money you are allocating to various needs. It also gives you an understanding of how you are spending your money. Read on to learn more benefits to having a personal finance spreadsheet.
Helps You Manage and Control Your Finances
A budget provides a savvy way of controlling money. When you have a personal finance spreadsheet you will be able to allocate money to what matters the most, and then not have to worry about the expenses that are usually unexpected.
This is vital if you are ever to achieve financial freedom. Check your spreadsheet and eliminate what doesn’t make sense for your financial goals.
Keep Track of Your Goals
One other advantage of having a personal spreadsheet is that you can include your financial goals as well, and keep a close eye on how you are achieving them.
If you are working with a fixed income, then you will be in a better position to stick to the budget and make ends meet much easily without any stress.
If you do not have any long-term saving goals, sit down and write what you want to achieve. Write this on the spreadsheet and find ways of achieving them, even if it is at a slow pace per month.
Opens Your Eyes to the Reality of Your Finances
When everything has been put on paper and you can see clearly how money is moving in your life, then you are able to pinpoint where problems exist. The spreadsheet is able to show where money is coming from, how you are spending the money, and how you can best save it.
You will also get to see where you have made mistakes in the past, and can correct this. In most cases, you will find that you have been spending money on things that are not that necessary.
For example if you can watch what you need on your laptop, then you do not need to have a TV subscription.
Since the spreadsheet shows the exact state of affairs, you can finally pin point the problem areas and find ways of correcting them. You can finally become more organized. Listing down all of your income and expenses can seriously organize your life.
It also makes it easy for you to quickly view the spreadsheet at any time, to see whether you are following the budget rules, and if you have fallen behind on any of the steps, then you can quickly correct this and move on.
It Helps Protect You From Unexpected Expenses
Things such as accidents that necessitate a trip to the hospital, or car repairs or the need for a plumber are unexpected expenses, and they can happen at any time.
When you have kept some money on the side for these types of events, you will always be at peace, knowing that if anything were to happen, you have the money to sort it out.
The last thing anyone wants to go through is a terrible incident and you have no money to cover it. You should keep at least $1,000 in a separate account to cover such unexpected expenses.
This really is the first step towards trying to take control of your life and your finances. Once you are able to control yourself in terms of expenses, you can then manage your finances in an organized manner, and take more risks when it comes to investments.