Best Budgeting Spreadsheets for your Financing Decision

It may not sound like the most enjoyable task in the world to create a budget, but it’s an essential part of maintaining your finances organized while attempting to control the level of funds you might need to live the way you want. Budgets help you manage your monthly spending, your vacations, your desires, and even your future finances.

Because budgeting allows you to create an expenditure plan for your money, it ensures you’ll always have enough money to cover all your expenses. If you are actually in debt, implementing a budget or spending plan can also keep you out of debt or help you find your way out of debt.

Financial Forecasting through Budget Spreadsheets

A budget is also needed when estimating the future funding requirements and figure out if they can be funded internally or require external sources of financing. Internal financing means using the cash generated from the business’ normal operating activities. On the other hand, external financing refers to the capital provided by parties external to the company such as banks or investors. Therefore, you need to use your budget to analyze how much external financing you will require.

You may want to chart your spending plan or budget for 6 months to a year down the road after you make your first budget and keep your finances on track. By doing so, you can easily predict which months your finances could be hard and which ones you’ll get additional revenue.

Steady growth in the industry will not only happen overnight. This is also prepared with caution and needs careful planning, thorough observations, and experience in financial forecasting. By analyzing the past and current state of your financial affairs, a good management accountant creates accurate and meaningful financial forecasts. These act as a real-time benchmark for the growth and financial health of your business.

Financial forecasting, a very important element of business planning, is commonly used as the basis for budgeting activities. The forecast puts forward a scenario the management believes is realistic to be achieved. As per definition, a budget is always wrong and only an educated best guess how the financial results will turn out. However, the process of preparing a budget is very helpful by itself as it helps management to anticipate the company’s problems and require them to find solutions in time. Therefore, financial forecasting will be very helpful for decision-making

Budgeting Tools for Financing Decisions

If you are managing the finances at work or at home, an essential first step is to have a budget in place. A budget is needed to learn where you are currently spending, decide where you can save, and determine where you want your money to be spent.

A comprehensive budget plan is a formal statement of the management’s expectations regarding the sales, expenses, volume, and other financial transactions of an organization for the coming period. Basically, a budget is a set of projected financial statements. These include the forecasts of:

  • Income Statement
  • Balance Sheet
  • Cash Flow Statement

While forecasting an Income Statement, more clarity on future revenues, costs, and profits might be obtained. However, for many businesses, liquidity planning is even more important. Therefore, one needs to forecast a company’s cash flow statement. This also requires to forecast the Balance Sheet.

A budget is not only a tool for planning but also to take control of the financing. At the beginning of the period, building a budget plan is standard. At the end of the period, it will serve as a controlling tool to help the management measure the performance of the actual result against the forecasted budget plan so that in the future performance, it can be further improved.

It is critical to take note that with the aid of today’s technology, budgeting can be used as a very effective tool for the evaluation of “what-if” scenarios. This way, the company is better able to come up with the best plan or strategy against different scenarios through multiple simulations. This can be done by financial forecasting which helps provide the necessary data to analyze the business financing.

If the resulting data isn’t to the company’s liking, especially to the budgeted financial statements in terms of various financial ratios such as the liquidity, turnover, leverage, profit margin, and market value ratios, the company the budget serves as a basis to analyze where the problems are or its origin. The company can then act upon and change their previous strategy and business plan. Though quite time-consuming for executives, the need to draft a new budget plan today is standard and viewed as good practice for managing any business in a responsible way.

Budget Spreadsheet Templates

Planning a budget is one thing, but the process of building a budget plan is not as simple as it sounds. If you use a complicated method to start your plan, you can easily and quickly get frustrated by its complexities and the multitude of available choices. You will need the necessary know-how to ensure that you will be able to draft a solid and sound budget plan for your company/business. Budgeting spreadsheets are one of the common tools used to build such a budget plan.

An individual benefits from using a spreadsheet for their finances just like a company as it places all the details in one easy-to-read location. It lets you see how much revenue you have and how your money gets invested, so you can budget your money better for your needs.

If you simply need to prepare the next years’ budget or if you want to run actual vs. budget variance analysis, a budget spreadsheet in excel might come quite handy. Not only will you save yourself the trouble of having to create a budgeting spreadsheet from scratch, but you will also obtain a working budget plan template created by expert financial modelers who poured their know-how in the template.

Top Qualities of a Good Budget Spreadsheet Template

So what should we look for in an Excel Budget Spreadsheet? Before you decide which budget spreadsheet template you’re going to acquire, here is our list of top qualities that we think are helpful to determine good budgeting spreadsheets.

  • Focus on short-term – Budget plans work best for short-term periods. This allows the business to control the funding easier as well as be able to compare the Actual vs Budget plan sooner. Thus, after analyzing the results, the budget plan will be updated again to ensure that there will be more improvement in the future.
  • Allows actual vs budget comparisons – This process involves using financial data to assess how closely a company’s spending and generated revenue meets the financial forecasting projections included in its budget. Performing regular budget vs. actual comparisons will reveal trends in your operations that could otherwise go unnoticed.
  • Identify deviations from the budget – Using budgeting spreadsheets, your business forecast, and your P&L statements by doing a side by side comparison of these numbers. Afterward, you can tell specifically where in your total operation you need to focus your attention based on the difference between expected and actual outcomes. Areas, where you were below or on budget, can be set aside for later.
  • Better understand cash-flows – it’s so important for businesses to understand the basics of cash flow and cash flow forecasting. Owners and investors needed to understand how a company’s operations are running, where its money is coming from, and how money is being spent.
  • Allows to track important KPIs – A good budget spreadsheet in excel offers you all insights, knowledge, and especially important Key Performance Indicators (KPIs) that you would surely love to track and measure so as to come up with a good financing decision.
  • Visual representation – Be able to observe your budgeting flow and variances by looking into a visual representation such as graphs and charts to carefully and exactly visualize your budgeting trend.

Budgeting Template Types

Although all budgets track finance, they can have various components depending on intent. Budgeting templates need categories which, along with other variables, are tailored to the scale and length of a project. Below are some of the most popular kinds of budgeting templates that you might use in your everyday life:

  • 3 statement model budget – This model budget comprises the 5 most common and generally use accounting statements namely: Income Statement, Balance Sheet, and Cash Flow Statement. This model combining three key reports into one consolidated forecast so altogether you can forecast your future cash position and financial health.
  • Zero-based budget – Zero-based budgeting is a way to budget where the revenue minus spending is equal to zero. With a zero-based budget, you need to ensure that your expenditures balance your revenue for the month.
  • Cash flow budget – A cash flow forecast is an estimation of all cash revenues and all cash expenses planned to occur for a given period of time. Yet cash flow budgeting just looks at moving capital, not net income or profitability.
  • Flexible budget – This is a budget that adjusts or flexes with changes in volume or activity. The flexible budget is more sophisticated and useful than a static budget.
  • Business budget – This outlines the financial and operational goals of your organization, so it can be considered as an action plan that helps you allocate funds, assess performance, and determining actions. When starting a new business a budget is an essential part of your business plan.
  • Student budget – As a student, you may not be earning a lot of money. But the best way to hang on to the money you do have is through budgeting. While it can seem a daunting job to make and adhere to a budget, the process may actually be simpler than you think.
  • Household budget – A personal or household budget is a detailed list of expected income and expenses that help you plan how to spend or save your money and track your actual spending habits.

Best Budgeting Spreadsheet Templates

We offer a selection of budgeting spreadsheets as used by our experienced practitioners. The spreadsheets come as Excel files and offer more insights into the budgeting process and the ways to present them.

The following budget spreadsheet templates are used by entrepreneurs, executives, and other users all over the world, such as in the US, UK, Canada, Australia, Japan, and many more countries that are in need of help from experienced financial modelers with substantial know-how.

With the range of budget spreadsheets and templates available online, it’s easy to handle your finances. These tools can help you save for an upcoming family event or a new business, as well as budgeting for routine, daily expenses.

Once you become more familiar with the use of spreadsheets, you will be able to create graphs that can show you your spending, saving, or earning patterns. Spreadsheets make planning, tracking, and observing personal finances much simpler every than before while providing you control over your finances.