The short answer: a monthly budget spreadsheet has three parts. A list of the money coming in, a list of spending categories with a planned amount for each, and a running log of what you actually spend. Compare the plan against reality each month and adjust. That's it.
Below is a step-by-step way to set one up in Excel or Google Sheets.
Step 1: Write down your monthly income
List every regular source of money coming in each month, such as your salary after tax, any side income, or benefits. If your income changes from month to month, many people use a cautious figure based on a lower month rather than their best month.
Step 2: Group your spending into categories
Categories make a budget readable at a glance. A common starting list is:
- Home: rent or mortgage, council tax, energy, water
- Bills: phone, internet, insurance, subscriptions
- Everyday: groceries, transport, personal care
- Lifestyle: eating out, entertainment, clothing, gifts
- Planned pots: money you set aside for goals or future costs
Keep the list short enough that you'll actually use it. You can always add categories later.
Step 3: Give each category a planned amount
Look back at recent bank statements to see what you normally spend, then set a planned figure for each category. Fixed costs like rent are easy. Variable costs like groceries are a best guess at first and get more accurate each month.
Step 4: Log what you actually spend
Add a separate tab for transactions with four columns: date, description, category and amount. Using a dropdown for the category column keeps spellings consistent so your totals add up correctly.
Step 5: Compare planned vs actual
Back on your budget tab, use a SUMIFS formula to total each category's transactions for the month. Then subtract actual from planned to see what's left. A simple example:
| Category | Planned | Actual | Left |
|---|---|---|---|
| Groceries | £320 | £214 | £106 |
| Transport | £120 | £88 | £32 |
| Eating out | £100 | £96 | £4 |
Figures are a made-up example.
Step 6: Review once a month
At the end of each month, look at which categories went over or under and adjust next month's plan. A budget is a living document, not a one-off exercise.
Frequently asked questions
Should I use Excel or Google Sheets?
Either works. Google Sheets is free and easy to open on your phone; Excel has a few more features. A well-built template works in both.
How many categories should I have?
Most people find 10 to 20 is manageable. Too many and it becomes a chore to keep up.
What if I go over in a category?
That's useful information, not a failure. It usually means the planned amount was unrealistic, so adjust it for next month.
Skip the setup
Our Monthly Budget Planner has all of this built in: income and spending categories, a transactions log with dropdowns, planned vs actual for any month, a year overview and a bills tracker. It works in Excel and Google Sheets.
Important: This article is general information to help you organise your money. It is not financial advice and doesn't take your personal circumstances into account. Any figures are made-up examples. For free, impartial guidance, visit MoneyHelper. If you're worried about debt, contact StepChange or Citizens Advice.