Obviously, your expense categories will be way different from mine. “Groceries,” for example, is very high because one of the ways I stay sane is by cooking wonderful meals and eating well. The category also includes wine and beer purchases, which can run fairly high, because I have one or two glasses of wine or beer with every dinner. When things are tight, the grocery category shrinks, because I’m fully capable of teetotaling and eating beans and rice every day for a week or two.

Estimates for some categories’ expenditures are always on the high side. This ensures that, barring a disaster, I will stay on budget in most or all areas. For example, all the utility bills are based on summer statements, when everything but gas is as high as it gets. I do not have my power bills prorated, because I can afford the summer bills and very much appreciate the extra money left by lower bills in the winter months. If I prorated the electric bill, it would come to around $175 a month, all year round—significantly more than I pay in the cool seasons.

Once you’ve figured out how much you think you can or should spend on each of your various expenses, the next step is to keep track of the real-life costs against your ideal expenditures. Open another spreadsheet in your Excel workbook. Enter the budgeted amounts for categories horizontally as column headers. Then enter the month’s actual expenditures, as negative amounts, below the budgeted figures. Here’s an example.

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