Dubai: Tracking your income and expenses can be as simple as budgeting every month’s salary or as extensive as tracking several years of transactions.
“When it comes to budgeting, start small and as you track your costs further, it can get more complex. This is when budgeting tools help,” said Mohammed Shaan, a Dubai-based financial planner. “You don’t get good at money management as soon as you start, but you perfect the skill only over time.”
You can use spreadsheet or budgeting tools to track costs
Making your own budget spreadsheet is a common practice for people paying off debt or just trying to spend less than they make. Using a worksheet or spreadsheet to track when your bills are due and when you plan to pay them each month has often proved to be a time-tested way to manage your money.
However, like a worksheet or spreadsheet, budgeting applications too require users to manually input all of their expenses and income. Some budgeting applications that can also help get your finances in order in the UAE include 'Emma', 'Fudget', 'Wally', 'YNAB' (You Need A Budget) and 'Yolt'.
Different ways UAE residents use a spreadsheet to budget
There are more than a few ways to budget your incomes and expenses using a spreadsheet. To know what approach is best suited for you, here are some techniques that are more popular than others.
• Budgeting using a fixed/variable costs technique
One popular way to do so is by using a Microsoft Excel sheet or Google spreadsheet. If you don’t have access to Microsoft Excel or Google Sheets, you can use the same functions in OpenOffice Calc, and access your budget using one of their various applications.
Al Ain-based Irish expat Sandee McCann and her husband always kept their expenses separate using a spreadsheet. "I keep track of charges on our credit cards on an Excel sheet and either attribute charges to him, myself, or as a split cost," she explained.
Here’s a sample of the type of worksheets they use:
• Budgeting by dividing income, costs, debt and investments
Another way to go about it is to segregate income, expenses, debt and investment. This is how Dubai-resident Sidhartha Halder keeps track of his incoming and outgoing finances using a spreadsheet – his go-to means of budgeting.
“I build a yearly plan with careful analysis of big expense blocks to set the goals for each type of savings or investment categories. I then track details every month, with the idea of saving first and spending after that,” explained Halder.
Here’s a template of the type of worksheets he uses:
A further breakdown of recurring or routine household expenses:
2. Create categories. Moving down to the expenses section, write down all the categories you typically spend money in. Include categories for all bills, spending, debt payments, and savings.
3. Estimate your expenses. Now that you have categories, list out the amount you expect to spend in each category in a column titled ‘budgeted’. Keep reading for how to determine how much to plan in each category.
Here are the common budget categories:
Fixed Expenses: Rent/Mortgage, Auto Insurance, Health Insurance, Life Insurance, Other Insurance, Subscriptions, Mobile Phone Bill, Utilities and Electricity (DEWA) and Internet.
Variable Expenses: Groceries, Restaurants, Fuel, Personal Allowance, Clothing, Entertainment, Household, Haircuts/Grooming and Gifts.
Miscellaneous Expenses: Write in a category for any expense unique to the month you are currently budgeting for that doesn’t tend to repeat.
How much to budget in each slot? How to know where to cut back?
After you printed out your last 3 months’ of bank statements, go through every transaction and label it with the budget category it falls into. Then, add up the total of each category and divide it by three to get the average spend in each category over the last three months.
Next, determine where you need to cut back. If you are struggling to make ends meet or spending more than you make every month, look at the categories you feel are the least essential and where your spending is the least controlled.
“Typically, you’ll be able to make big cuts in your restaurant, personal spending, groceries, entertainment, and miscellaneous categories,” Shaan said. “Try cutting back at least 10 per cent in each one and set that as your new budget. Don’t hesitate to cut back if you know you’re spending too much.”
“Honestly, there are too many budgeting tools out there, but I haven’t found a budgeting application that is best suited to my needs and I still prefer to manually enter my transactions and control the layout of my budget. This is why worksheets are still my go-to means of budgeting,” added Halder.
McCann, on the other hand, feels that “even though budgeting can get labour-intensive and time-consuming, the tough task helps me understand exactly how much I am spending my money each month, with the added benefit of not having to pay for it like she would want for budgeting apps.”
Final thoughts..
As everyone's financial situation is different, you may find that not every category in these worksheets below is applicable to your income or spending.
You may even recognise that some months are different than others, but you should find after going through this exercise that you are more prepared for those changes and that you're accounting for unanticipated expenses as well.
Should you find that at the end of the month that you are consistently spending more than you are bringing in, it might be time to take a closer look at where you're spending your money and adjust those areas where you can to make up the difference.
“Should you find, on the other hand, that you consistently have money left over every month, you now have the opportunity to decide what to do with that extra cash,” added Shaan. “Perhaps you need to build up an emergency or ‘rainy day’ fund. You could also be contributing more to your retirement savings. Consider paying off some loans faster, or perhaps you can start saving up for a large purchase.”
