How to Use Excel to Manage Expenses and Investments (Even If You’re a Newbie!)

“What is the best way to keep track of one's finances?” is a question that is often asked and answered on the Internet.

While suggestions range from a good old Excel sheet to budgeting ‘apps’, to Google docs, the focus seems to be on listing and tracking every expense.

I think this is classic micromanagement with no sight of the big picture. As a firm believer of ‘less is more’ I would like to share with you a financial tracker that I have been using for the past 6 years.

The tracker incorporates simple but well-known axioms,

  • Pay yourself first
  • Expenses = Earning – Investments

The basic idea is the following:

  • List all short-term (< 5Y) and long-term (> 5Y) goals
  • Determine how much one needs to invest each month for each of them
  • Determine how much one can invest each month, taking into account, expenses, and liabilities
  • Start investments and set a target.
  • Try to minimize total expenses and increase investments.
  • Track investments and total expenses alone each month.

As long as we invest an amount equal to or greater than your target for each goal, it is irrelevant how the rest of the money is spent.  Therefore, there is no need to track expenses for travel, milk, groceries etc.

  • When we get cash at the start of each month, we pay ourselves first. Meaning we invest what we have to (or close to it!) for all-out short/long-term goals.
  • We allocate (not invest) money for recurring annual expenses like insurance premiums, school fees etc.
  • We allocate money for liabilities if any (now you know why they say keep that EMI as low as possible!).
  • The rest can be spent to our heart’s content!

What is that?  Do I hear you saying, ‘in your dreams, pal!’?

Yes, I see what you mean. How many of us can manage to do the above:

Invest what is needed for all our goals, take care of liabilities and recurring expenses and then spend the rest!

Yes, it is quite difficult, but I am convinced that it is the only way to achieve all our dreams and goals.

I have been doing this for 6 years. Initially, I could only invest about 50% of what I had to. Over time it improved.

Unmonitored cash evaporates!  So monitor, we must, with the right priorities.

Here is a screenshot of the financial tracker:

Financial tracker

The monthly tracker sheet for the current year is shown here with some imaginary numbers for the month of August.

The green cells in the rightmost column show the target monthly investment required for retirement and four other goals.

Suggested: Read more about Finance Basics

The entries are sourced from the goal planner sheet (red tab).

A similar tracker for future years can be created by using the copy sheet command making appropriate changes.

The blue tabs (one for each goal) are used to track the monthly investment made for each goal, year after year. The target for each year is available for reference in each sheet and compared against the average investment made for the year.

Here is a screenshot:

Financial tracker goal sheet

The sheets are not password protected. Please feel free to modify as per your requirement. Do post your suggestions so that everyone can benefit from them.

Happy investing!

Download the Monthly Planner

M. Pattabiraman aka pattu is an Associate Professor (Physics) with IIT, Madras, India. His area of interest include physics, personal financial planning, simple tools creation related to financial planning.

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How to Use Excel to Manage Expenses and Investments (Even If You’re a Newbie!) 1

9 thoughts on “How to Use Excel to Manage Expenses and Investments (Even If You’re a Newbie!)”

  1. The download link is’nt working.

  2. A must read for someone who want to learn expense management using excel.

  3. Excellent one. Actually, these can (I would say should) be copyrighted, since this is high quality sheet, even with stunning simplicity. Sad thing is, even when I give references to blogs like this, people hardly go through these. I am an avid reader of anything personal finance, but I think there should be a way people should value sheets like these.

  4. Hi,

    Thanks a lot to exposing a layman like me to the complexity of financial planning in most simple way with simple tools. This is very impressive and I have shared the links to my frnds and colleagues.

    Keep enriching!!

    Ashutosh

  5. This is such an excellent material.

    However, you might want to simplify your formulaes. Its abit complicated for newbies.

    You are doing an awesome job. A life changing help is what you are rendering.

    God Bless You.

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