Spreadsheets that changed my life: Part 1 – Expense Spreadsheet
Anyone who has known me for a while would tell you that I’m someone who generally spends without thinking twice. I have spent ₹50,000+ on a weekend drive, bought a ₹35,000 watch on a whim, booked a ₹3,00,000 vacation in 15 minutes, and much more. I have never worried about money — always ensured I earned more than I spent and made sure my cashflows were steady. I never indulged in spending fueled by debt and also obviously had something as savings — just that I never gave it a lot of thought.
I’m not saying this as a matter of pride — in fact, the opposite. This spending-without-much-thought habit was a ticking time bomb that exploded when I got married in 2018. What happened? My monthly income didn’t rise substantially but my monthly expenses almost tripled. A salary of ₹X that enabled an ultra-luxurious life as a bachelor suddenly became table stakes to run a family. Both my wife and I were very clear that we wouldn’t draw from our savings to meet monthly expenses. So we had to make sure we brought our monthly cash flows in control. We mostly refers to just me here because she’s super conscious about what she spends on and doesn’t spend a penny wastefully!
Bringing finance under control was easier said than done for me because I had no idea how much I spent on a monthly basis, much less where/what I spent it on. But I realized that the current setup was unsustainable and something had to change.
I decided to do three things:
- Have well-defined budgets for each anticipated expense category
- Track every spend made — cash, debit card, Paytm, whatever
- Not to allow unplanned expenses as much as possible
Enter Expense Spreadsheet.
We usually create a spreadsheet for every year on Google Sheets and each month of that year resides a separate sheet within the document. There are also a couple of master sheets called the Summary Sheet and Budget Sheet - we’ll ignore that for now.
Each month is then divided into three sections.
- The Ledger
- The Bird’s eye
- The Splits
The Ledger #
The first 8 columns of the sheet (what you see above), which I call the ledger, are occupied by the following fields
- Date of transaction
- Item (a quick description of what the transaction is about)
- Category (one of a dozen predefined categories like Rent, Internet, etc.)
- Person (me or the wife)
- Nature (Income or Expense)
- Paid with (the transaction mode)
- Comments (whether this is reimbursable, repayable to someone, etc.)
This is just a list of all transactions done in a month — inflow and outflow. Spent ₹10 on coffee? Got back ₹23 as dividend from those shares I bought? Lent ₹3,000 as a loan to a friend? Borrowed ₹3,000 from a friend? Everything goes here.
I use this wonderful app called Walnut to track expenses that I make digitally (I don’t use cash much simply because it’s harder to track). I also have a recurring todo on my Todoist which makes sure I update my Expense Spreadsheet every 2 days.
Once I have added all the inflows and outflows that happened since the last update, I move onto the bird’s eye to make sure everything looks OK.
The Bird’s Eye #
Simply put, the bird’s eye answers the following questions for me.
- What was my opening balance this month, how much did I earn, and how much did I spend?
- Have I made any bad channel spends? I list credit cards, postpaid payments, etc. as bad channels — I know people like to extol the virtues of credit cards but I’m wary of them generally. (And yes yes, I know Paytm Postpaid no longer exists - just too lazy to delete that row!)
- Based on my opening balance, my inflows, and my outflows, what’s the Computed sum I’m supposed to have right now?
- What is the sum I actually have — in my account, as cash, in Paytm, etc. put together
- Based on what I actually have, what’s the surplus/deficit amount left after accounting for pending expenses in the budget?
- Do I need to receive money from someone? If yes, who?
- Do Soundarya and I owe money to each other? (This may come off as odd but we have clearly defined areas of responsibility in the house — for example, she takes care of groceries and I take care of the rent — if either of us spend on the other person’s category, we usually repay).
This bird’s eye is the most important part of the spreadsheet. It basically tells me everything I need to know about my financial standing for the current month. Am I overspending or am I under control? Do I have a lot of receivables pending? Have I spent unnecessarily on bad channels? This is all I need to know. If there’s something amiss or I want more granular data, I move into the Splits.
The Splits #
The Splits section tells me how much we have spent on what. At the beginning of every month, we use a shared Google Doc to list down all the expenses we foresee for the upcoming month and create the categories on the Expense Spreadsheet (fun fact: the type of things you spend on, regardless of how profligate/reckless/convservative you are, doesn’t change!).
At a broad level, we have split it into: Home, Car, Jupiter (Soundarya’s 2 wheeler), Gokul, Soundarya, General, Loans, and Travel. Each category has a bunch of items under it which we assign budgets for. As we keep adding entries in the ledger, the spends are mapped to these categories, and the percentage of budget we have used up becomes clear. It moves from 0% (green) to 100% or higher (red). The goal is to keep all entries at 100% or lower. Do we overshoot sometimes? Definitely, but it’s rare.
That’s it! We keep replicating this every month and every year.
So, how does it help? #
First, I know how much I’m supposed to spend on each category and what category the item I’m spending on belongs to. It has made me much more conscious of what I spend on. Second, it is not that I have become a miser because of this level of tracking — in fact, it frees me up to spend without feeling guilty. Third, I know where I stand at all times, financially — this makes sure there are no unpleasant surprises; even if a crisis arises, I know exactly where to move money from/to in my budget. In short, I know what I earn/spend, how much I have right now, and how much I’d need to accommodate all my requirements for the month.
The Expense Spreadsheet is honestly one of the spreadsheets that changed my life (more on the other ones as separate blog posts 😉). My wife and I have made it a single source of truth for household finances. Plus because it’s a spreadsheet, it’s indefinitely extensible! We can get any kind of data we want.
I have templatized it for anyone to use — a lot of you maybe using similar spreadsheets/tools, but if you are finding it difficult to stay on top of your finances or you’re just looking to improve your current financial workflow, you can request access to the template here (it’s a pre-filled email to me). I hope it helps you too!