Income minus spending, the number you actually care about
Okay sooo. Last time we set up five categories for income and spending. If you did that, you've got a sheet with numbers going in and numbers going out. Today we do the part that actually matters, which is putting those two things together so they talk to each other.
Here's the thing. A budget with income sitting in one section and spending sitting in another isn't actually a budget yet. It's just two lists. The number you care about, the one that tells you anything real, is income minus spending. That's it. Everything else is decoration.
Setting up the math
You should have your income total somewhere, probably from a SUM formula we built a couple lessons back. And you should have a spending total the same way, adding up your five categories.
Pick an empty cell below both of those, or off to the side, wherever makes sense on your sheet. Type an equals sign, click your income total cell, type a minus sign, click your spending total cell, hit enter.
That's the whole formula. Something like =B10-B16, depending on where your totals landed. If you're staring at it wanting it to be more complicated, it isn't. This is one of those spots where people assume there's a trick they're missing. There isn't. Subtraction is subtraction whether it's two numbers or two totals.
Label the cell next to it "Left over" or "Difference" or whatever you'll actually recognize in three weeks when you open this file again. Future you will not remember what B17 means. Past me did not remember either, more times than I'd like to admit.
Reading the number
If it's positive, you brought in more than you spent that month. If it's negative, you spent more than you brought in. I know that sounds almost insultingly obvious written out like that, but I've watched people build a whole colorful budget and then squint at a negative number like it's a foreign language. It isn't. It's just telling you what happened.
Not gonna lie, the first time I built this for my own house I expected some big revelation. There wasn't one. It just confirmed what I already sort of knew, that daycare costs and diapers eat more than I want to look at directly. That's the sheet working, though. Boring confirmation is still information. You didn't need a chart with five colors to tell you December's expensive. You needed one number that's honest.
A little formatting, so it actually reads
Once the formula's in, format that cell so negative numbers show up red. In most spreadsheet programs you do this through the number formatting menu, there's usually a preset for "negative numbers in red" or you can build a custom one. I like this because it means you don't have to read carefully to know if you're in trouble. Red jumps out before your brain even processes the digits, which on a tired Tuesday night is exactly the kind of shortcut you want.
A quick story, since we're on the topic of what lives in your cells
I mention this because it's a good reminder that your sheet is allowed to have a little personality in it and it won't break anything. A while back my daughter Lilly, she's four, climbed up into my lap while I was working on the family budget. She grabbed the mouse, clicked into a cell, and typed a solid line of "kkkkkkkk" right into it. Cell B12, very confidently, like she'd solved something.
I left it. For a full day, actually, because every time I opened that file and saw "kkkkkkkk" sitting there next to my grocery total it made me laugh. Eventually I deleted it because I needed the cell back for real numbers, but I want you to know that a stray typo or a weird entry from a kid or a fat-fingered mouse click isn't going to hurt your formula unless it's actually inside a cell your formula is pointing at. Formulas are more forgiving than people think. They only care about the specific cells you told them to care about.
If the number surprises you
Sometimes people run this formula for the first time and the number is way worse than they expected. If that's you, don't panic and don't immediately go rebuild five new categories to explain it. Sit with the one number first. It's telling you something true, even if it's not what you hoped to hear, and the next few lessons are about digging into which category is doing the damage. One step at a time.
Before next time
Get your income-minus-spending formula built and formatted, and just look at last month's actual number, whatever it turns out to be. Don't fix anything yet, just see it.
- C