How to Use Spreadsheets for Accounting

While a budget says something about what will happen with a person’s money, an accounting tells us what actually happened. You make a spreadsheet in the same way you do when you make a budget. The only difference is that in this spreadsheet, you write down the income and expenses that actually occurred.

An accounting has larger consequences than a budget, because the numbers in the accounting spreadsheet are a picture of the actual reality. The budget only says something about what you want, or plan, to happen.

If the accounting shows that you have a larger income than your expenses, then you actually have a surplus—money left over that you can spend or save. This is positive, and you can continue your current lifestyle.

If the accounting shows that you have a lower income than your expenses, you could be in trouble. Then you’ll have a deficit, and you might lack the money to pay what you need to, if you don’t have enough savings. This is very serious.

If you experience a deficit, you have to make some changes. To cover the deficit you’ll have to take money from your savings account or take out a loan. In addition, you’ll have to change your lifestyle or get a job that increases your income.