While these days you can have multiple savings accounts without incurring extra fees, it’s often easier to keep all your savings in one account. But if you’re working towards a variety of savings goals, how do you keep track of your progress towards each goal?

I like to use an excel spreadsheet to allocate various savings amounts to each savings goal and monitor my progress. This sheet forms part of my budget. Below is a tutorial on creating a savings spreadsheet similar to the one that I use. This spreadsheet may seem a little complicated, but once it’s set up it is easy to use, you just plug in your numbers ever month the formulas take care of the rest. I like to update mine every time I do any online banking.

Of course, you can create a much simpler spreadsheet, or just use an exercise book and a pen, which is how I used to track my savings for years before moving to excel.

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This tutorial is a follow on from Part One where we designed a basic budget. In this tutorial, we’ll copy and paste the budget format over to create a spreadsheet for actual income and expenses and a variation spreadsheet that will show the difference between what we budget and what we actually earn/spend.

If you haven’t already, check out Part One of this tutorial.

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Excel is an awesome programme for personal budgeting. I have been using it now for 3 years. When you create your own budget yourself, you can customise it to meet your own needs and circumstances exactly.

This tutorial starts from the very beginning for those who have never met a spreadsheet before. I use Excel 2007 so if you’re using the older version of Excel, you will find the same functions in the tool bar and menu bar. If you don’t have Excel, then the free alternatives (Open Officeor Google docs) are pretty similar and this tutorial should still, I hope, be helpful.

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Tracking your expenses day to day is fundamental to knowing exactly what you’re spending your money on and how much you’re spending. Writing down all of your expenses is also the basis of a good budgeting system.

Like any habit, writing down how much you spend and on what takes a little time to remember to do.  To make the task easier, I’ve created some printable household expense worksheets that you can download.

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At this time of the year, busy at it is, there are two things that I do in preparation for the coming year. One is setting new goals, of which I’ll write more about next week, and the other is getting the household budget ready.

I get pretty excited about this task (ok, I admit I don’t get out much and find this stuff fun), because I love the hope of new beginnings and the unrealised potential of ‘next year’ (silly as that may sound – a blank spreadsheet has a lot of potential) and I love crunching the data on the past 12 months of spending.

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If you are using Excel to keep a budget and want to add a graph but don’t know how, then this tutorial will show you how. Instructions are for Excel 2007, but all the options are available to create a chart under the Insert menu in previous versions.

I have been keeping my budget in excel for four years now. Previous to that, our budget was kept in a little exercise book. Just after we first bought our house, I decided to create some graphs. It was just for fun really (I know, I need to get out more!), but what I found really surprised me. The numbers that had been staring me in the face for years suddenly jumped up and had meaning. I could see our finances for the first time. And I realised for the first time just how much of our income was going towards our mortgage.

A sheet full of numbers is great, but for an instant idea of how your finances are, you can’t beat a graph. It condenses all those numbers down into a visual representation that has immediate meaning.

For this tutorial, I’ll be using the same budget spreadsheet as I used in the loan calculations tutorial. All figures are made up. If you don’t have a budget but want to have a go, you can download this spreadsheet here.

The first thing we’ll do is create a quick pie chart of our expenses.

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This is Part Three of a three part series on using excel for loan calculations. If you haven’t already, check out Part One  and Part Two of the tutorial.

In Part One we set up a loan amortisation table, and Part Two we made some formatting adjustments and pulled out some results in a mini report. Today, we will dynamically link these results to a cash flow budget so that we can run different scenarios and see how this is going to affect our cash flow.

All results are based on the assumption that the interest rate remains fixed throughout the entire loan term and that interest is calculated monthly and payments made monthly. It does not take into account bank fees. Banks often have their own confusing ways of calculating interest, so your results may differ from theirs.

Below is an example of a cash flow budget. You will notice it’s incomplete but it gives us an idea of how this works. I’ve previously written a post on how to set a cash flow budget, but not specifically how to do it in excel, so if you would like me to write a tutorial on that, let me know.

I just pulled the numbers in the cash flow budget off the top of my head and they don’t reflect any real life information.

You will notice that I’ve left the mortgage field in the spreadsheet blank, this is where we will put in our linking formula.

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This is Part Two of a three part series on using excel for loan calculations. If you haven’t already, check out Part One of the tutorial.

All results are based on the assumption that the interest rate remains fixed throughout the entire loan term and that interest is calculated monthly and payments made monthly. It does not take into account bank fees. Note that banks can often have their own confusing way of calculating interest!

Continuing on from Part One, let’s start by putting in our extra repayment amount. We will put this in the field under our PMT data, and make it $80 per month. Because we’ve already formatted our table, the extra repayment column updates automatically as well as all the other cells in the table.

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This is Part One of a three part series on using excel for loan calculations for beginners. I’ve used Excel 2007, but all calculations can be performed just as easily on earlier versions.

In Part One we will set up our loan or amortisation table, in Part Twowe’ll tweak some of the formulae and pull out some information into a mini report and run some scenarios, and Part Three we will link our results in our mini report to our budget and have a look at how running scenarios will affect our cash flow.

Check out the PMT tutorial before starting this one to create the initial data table.

Of course, making loan calculations can be done easily using free online loan calculators, but that’s not as fun as doing it yourself in excel, and this way you can link your information into your budget to run some dynamic financial scenarios.

I’ll start with the same information from the PMT exercise. All results are based on the assumption that the interest rate remains fixed throughout the entire loan term and that interest is calculated monthly and payments made monthly. It does not take into account bank fees.

Then we’ll add some headings for the amortisation table.

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Photo by C Guille

This is the third and final part of the series about the steps to take to gain control of your finances. If you haven’t already, check out part one and part two of the series.

So far I’ve looked at examining attitudes to spending and recognising and adjusting spending habits; understanding your finances; setting financial goals and using a budget to meet those goals by systematically reducing expenses; and taking a look at your debt position in order to reduce your debt.

7. Building Your Savings

Cash flow is the money “flowing” in less the money flowing out (including debt repayments). At the end of the month, any surplus money is savings. I usually draw up my budgets as a cash flow budget and include all cash flowing in and out, so I can monitor my savings.

Is it a good idea to save money? Some like Robert Kiyosaki, the author of Rich Dad, Poor Dad, argue that ‘savers are losers’. The reason, they argue, is that the cost of inflation outstrips any interest earned on savings and there are better vehicles for building wealth than a savings account. While this makes sense, I would be surprised if these authors don’t have significant cash reserves.

Building savings in the form of an emergency fund gives you a buffer against tough times and enables you to make significant purchases or pay for unexpected expenses without going into debt.

Building savings is a way of reaching your financial goals.

Building savings enables you to take advantage of investment opportunities as they arise – without cash reserves this would be a lot harder to do.

There are many reasons why you would build your savings – as many reasons as there are financial goals, and each one is as valid as the next. You might be saving for a deposit on the house, or for an overseas holiday.

The key to building savings is to just do it. No matter how small an amount, save what you can because every dollar adds up.

As you save your money, track your progress. There are many ways to do this, some people make a chart to colour in and making it visual and accessible is a great way to keep motivated. I keep a spreadsheet as part of our budget that tracks our savings account. We have a single high interest account, but I break this up on a spreadsheet into different categories such as saving for a new car, saving for up coming expenses like the rates, saving for a holiday and saving for investment.

Remember that one of the keys to wealth building is to pay yourself first. Saving for the rates and the car registration means that we don’t have to put these bills on credit, but it’s still paying someone else. I try to make sure that part of our savings always goes to our “investing” category (which we then invest) to ensure that we are always paying ourselves first.

8. Building Wealth

Building wealth will mean different things to different people depending on your values. Building wealth might mean living off a passive income generated by shares and property. Building wealth might mean living debt free so that you can work less and spend more time doing the things that you love. Building wealth might mean investing in solar power or a vegetable garden or investing in education. Or it might be a combination of all of these things. All of these definitions are valid.

Whatever your concept of building wealth, it is grounded in spending less than you earn and investing your savings.

For a variety of reasons, a lot of people shy away from the concept of building wealth. Our society demonizes being wealthy. We equate wealth with deception and greed and exploitation. I disagree. I would like to build wealth so that I can convert our house to solar energy. I would like to be able to afford to buy a small property and raise chickens. I would like to be earning enough working from home doing the things that I love so that I can be at home to raise our children. And I would like to do all of this without exploiting others.

Some would say that wealth building is diametrically opposed to being frugal. I guess that would depend on your definition of what being wealthy is. Being frugal isn’t about being cheap or being poor, it’s about being wise with your money. Without being able to live on less than you earn (no matter how much you earn) , building wealth will be difficult if not impossible.

While there are those who advocate a ‘no money down’ approach, for most of us, building wealth begins with saving money. Don’t underestimate the power of compounding – wealth building is an option for everyone. Read up on different investment options and get as educated as you can before diving in. Beware of trusting your money to someone else without understanding what you are investing in and what they are doing with your money. Having said that, if you’re anything like me, you might wait too long and miss opportunities by being afraid to have a go. Education is really the key to reducing the risks of investing.

The principles of wealth building are actually quite easy, the devil is in the detail. 

9. Monitoring Your Progress – Celebrate Victories

How well are you progressing towards your financial goals? The only way you will know that for sure is by tracking your progress.

Use your budget to monitor whether your spending is staying on target. Your financial goals are your destination and your budget is the map to get there. Your budget will tell you each time you sway off the path of your goals.

Track your savings account and watch the difference between your actual savings amount and your target savings amount shrink as you get closer to your goal.

Monitoring your progress is both a validation of the effort you are making to reaching your goals and a motivator to keep going.

Celebrate your milestones and celebrate your arrival. Having a vision for the future and working towards it is not the easy path – it’s easier to live in the moment and not think about the consequences or the future. It’s easier to just obey the social directive that we are bombarded with everyday to buy, buy, buy. It’s easier not to make your own, cook for yourself, remember to turn off the light, or pay off your debt quicker. But the easy path is not always the best path. Choosing otherwise, well, power to you! Celebrate this, it’s a victory!

The underlying principle of this three part series is that the key gaining control of your finances is to empower yourself with information. Know your spending habits. Know your finances. Know your values and your goals. Know your financial position and your debt level. Know what you are saving towards and why. Educate yourself about investing.

It’s about choosing to be responsible for yourself, to understand the consequences of the everyday decisions that we make and by being responsible, take control.

There are days when we spend $30 on KFC. There are days when we say “oh, blow the damned budget!” I just try to aim for having less of those days and more days where I know where I’m heading.

Did you like this series? Did you find it helpful? Do you have some points to add? If you do, please feel free to leave a comment below. I would love to hear from you.