Learn Excel to Achieve Financial Freedom

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In the previous article, I talked about how to divide your income into different buckets. If you haven’t read that article yet, read The Only Formula to Get Rich.
Now, how can you keep track of those buckets to see if they are full or empty? You could set up five individual bank accounts and set up an instruction to auto-deduct from your main account by sending money to those five accounts when you get your salary. So, whenever you receive money into your main account/salary account, it will automatically be distributed into those five accounts. But this is not a feasible way.
I’ll create an Excel file that will help you keep track of those buckets and improve your spending habits. Not just that, while creating that Excel file, you’ll learn a couple of things about Excel as well if you haven’t already.

Let’s first draft how our Excel sheet will look.

This is the raw concept. I have to input only four things each time I deposit or withdraw money from my main account:

  1. Date
  2. Amount
  3. Category
  4. Comment (purpose of that transaction)

In the Amount column, if money enters into my main bank account, then the amount will be positive. If money is being withdrawn from that account, then the amount will be negative.

The amounts shown in the Necessity, Savings, Investment/Learning, Fun, and Donation columns will be automatically added depending on what I type in Category column.

Formulas

Let’s start with the Necessity column. If the category is ‘deposit,’ then 50% of that amount will be added to the Necessity column, and if the category is ‘necessity,’ then the whole amount will be added to the Necessity column. So, we will add the following formula to cell D9:
=IF($C9=”deposit”,$B9*0.5,IF($C9=”necessity”,$B9,””))

The amount will be automatically converted to half of the deposit amount. Now, I will click and drag down the green dot at the right end of cell D9 up to 100 rows. You can drag more or less depending on your need.
Similarly, add the following formulas in the other four columns and then drag them down to copy and paste the formulas in the other rows.
For Savings:
=IF($C9=”deposit”,$B9*0.2,IF($C9=”savings”,$B9,””))
For Investment/Learning:
=IF($C9=”deposit”,$B9*0.2,IF(OR($C9=”investment”,$C9=”learning”),$B9,””))
For Fun:
=IF($C9=”deposit”,$B9*0.05,IF($C9=”fun”,$B9,””))
For Donation:
=IF($C9=”deposit”,$B9*0.05,IF($C9=”donation”,$B9,””))

Now, only the upper part is left.

This is very easy.

For Available Balance in Main/Salary Account, in cell C1, use the formula: =SUM(B:B) It should match your bank account balance. Similarly, for Available Necessity, in cell C2, use the formula: =SUM(D:D) You can do the rest.

Finally, the Excel file will look like this.

From now on, you just need to add the date, amount, category, and comment.

Maintain this Excel file, and you will be one step closer to financial freedom.

To get the excel file, click here.

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