Managing money can feel overwhelming, especially when there is no clear system in place. The good news is that getting started does not require special software or complex financial tools. With just a basic Excel spreadsheet and a few minutes of attention each week, anyone can begin to keep track of personal finances, build a realistic budget, and track expenses effectively.

This guide will teach you how to keep track of personal finances in Excel and build a proper budget plan that works. The goal is not to manage like a financial expert but to build a system that simply works, is easy to maintain, and helps you make more informed decisions about your money.

How to Keep Track of Personal Finances

Step 1: Identify the Purpose

The first step is to understand why tracking finances matters. Some may want to save for a specific goal, pay off existing debt, or simply stop feeling confused about where their money is going. Knowing the reason makes the habit easier to maintain and gives the process meaning.

Step 2: Set a Daily or Weekly Check-In Time

Consistency matters more than frequency. Choosing a time to log (we always suggest the public commute on your way home, one perk of public transport!). Or if you prefer it done on a weekly basis, a routine such as every Sunday evening helps make the habit automatic.

During each check-in:

• Add new expenses or income (daily/weekly)
• Review how much has been spent in each category (weekly)
• Compare planned versus actual spending (weekly)

Step 3: Set Up the Excel Workbook

Create a workbook with two separate sheets:

1. Transactions Sheet
   This is where all spending and income are recorded, item by item, with clear categories.

2. Overview Sheet
   This summarises the planned budget, actual spending, and the difference for each category.

Separating these two views keeps the spreadsheet organised and helps maintain clarity.

How to Budget Properly

A common mistake when starting to budget is trying to guess how much should be spent in each category. It often leads to unrealistic limits that are difficult to stick with. The better approach is to begin by observing how money is actually being spent.

Step 1: Track First, Then Budget

For the first month, the only goal is to record all income and expenses. No budgeting yet. This step is crucial because it creates an accurate baseline to work from.

Set up four columns in the Transactions sheet:

The more accurate this log is, the better the resulting budget will be.

Step 2: Categorise Spending and Summarise

After a full month of tracking, return to the Overview sheet and total how much was spent in each category. Use a formula like the following:

=SUMIF(Transactions[Category], "Groceries",Transactions[Amount])

This should be done for every category, and the totals will reflect real spending habits.

Pivot tables and charts are your best friends here!

Step 3: Set Budget Limits That Make Sense

With actual data in hand, begin setting budget limits. If the data shows $500 spent on food, and $200 of that was snacks or takeout, then a reasonable goal could be to bring that down gradually rather than cutting the entire category harshly. Budgets should be realistic and flexible, based on actual behaviour.

Create a table like this in the Overview sheet:

Now the budget is based on evidence, not guesswork. It becomes more achievable and relevant.

Practical Budgeting Example

There are several ways to structure a budget. Here is an example of one method

Zero-Based Budgeting

This method involves assigning every dollar of income to a specific purpose, so that income minus expenses equals zero.

Example for $3,000 in monthly income:

• Rent: $1,000
• Groceries: $300
• Utilities: $150
• Dining Out: $150
• Debt Payments: $400
• Savings: $500
• Transportation: $200
• Remaining: $0

This method ensures that all money has a purpose, even if that purpose is saving or fun spending. It works best for those who prefer structured planning.

How to Keep Track of Expenses in Excel

Once you’ve spent a full month logging your income and expenses in the Transactions sheet, the next step is to build the Overview sheet to summarise and review your spending.

Step 1: Set Up the Category Table

In the Overview sheet, create a table with four columns:

• Category – List each unique spending category used in your Transactions sheet
• Planned Amount – Enter your monthly budget for each category
• Actual Amount – This will be calculated using a formula
• Difference – This shows if you’re over or under budget

Example:

Step 2: Link Actual Amounts from the Transactions Sheet

In the Actual Amount column, use a SUMIF formula to pull totals from the Transactions sheet. For example, to calculate how much was spent on Groceries:

=SUMIF(Transactions!C:C, "Groceries", Transactions!D:D)

This assumes:

• Column C in the Transactions sheet contains Categories
• Column D contains Amounts

Repeat this formula for each category by replacing "Groceries" with the relevant category name.

Step 3: Calculate Differences

In the Difference column, subtract the Actual from the Planned amount:

=Planned Amount cell - Actual Amount cell

For example, if cell B2 is the planned amount and C2 is the actual amount:

=B2 - C2

Positive values mean you’re under budget. Negative values indicate overspending.

Step 4: Update Regularly

As you add new rows to the Transactions sheet during your weekly check-ins, the Overview sheet updates automatically—no need to re-enter data. This setup gives you a live view of where your money is going and how it aligns with your budget goals.

Conclusion

Learning how to keep track of personal finances and creating an effective budget does not require a major lifestyle shift or advanced knowledge. The key is to start small, be consistent, and base all decisions on real numbers rather than guesses.

Begin by observing where the money goes, then use that knowledge to create a budget that fits actual spending habits. With a simple Excel file and a bit of regular attention, personal finance becomes less stressful and more manageable.

No fancy tools. Just data, clarity, and a commitment to stay aware.