This simple spreadsheet can change your financial life
Knowing exactly how much money is flowing in and out of your bank accounts each month can make it easier to budget, know you have enough money to buy something, and feel financially secure in retirement. While talking to a financial advisor would be the best thing when a financial map, a simple spreadsheet would be a good point.
A simple, simple spreadsheet that only recommends three columns (but remember that you can and should change your order based on what will work best for you).
Why create a financial spreadsheet for retirement?
This financial spreadsheet makes it easy to monitor your finances, assess where you are financially now and determine how much money you have or need for your future.
This spreadsheet’s greatest strength is that it provides visual clarity to your finances. You will know how much you earn and how much you can spend after covering your basic needs, such as gas and food. Listing all your expenses can help you identify purchases you may decide to make, such as expensive gym memberships or unused subscriptions.
Creating one of these spreadsheets is pretty easy, and you can do it with Google Sheets, Microsoft Excel or a similar program. This way you can automatically add income and expenses to get your total values.
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How to make a financial spreadsheet
Your spreadsheet should be customized for your specific needs. But here are three columns you’ll want to include as you begin.
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One column: fixed income
The first step is to create a column that includes the sources of income you received in retirement such as social security, pensions and funds.
This column shows your bottom financially. You’ll get an idea of how much you should spend each month before you withdraw money from your nest egg. Understanding how much you’re getting from your budget can help you avoid overspending.
Second Column: Fixed costs
The second column contains the fixed expenses that you have to pay each month. This can include essentials such as your mortgage, insurance and food.
This column allows you to easily compare your fixed expenses to your fixed income to understand if you need some extra money every month or if you have extra money to save. Ideally, your planned expenses should be less than your planned income, and the wider margin amounts to more income for the third column.
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Column Three: Discretionary spending
This column lists the costs of things you want but don’t need, such as vacations, hobbies, and food. These expenses may require withdrawals from your retirement savings if your planned income is insufficient to cover your fixed expenses and discretionary spending.
Retirees can reduce discretionary spending during an economic downturn to preserve their nest egg. But you also want to enjoy retirement. This column can help you understand how much room you have in your budget to do so.
