What Excel Can Do for You
Excel is Microsoft’s spreadsheet program. It is not a home finance program, so why am I using it in this website? Excel is a very flexible program that has applications in many different areas, and one of them is finance. Excel might not be designed specifically for personal finance, but it certainly has the tools you need. Let’s take a look at the fundamentals of Excel. If you already have some familiarity with Excel, you might want to skim or skip this post.
At the heart of Excel is the concept of a worksheet. You can think of a worksheet as an electronic form of a page from a ledger book that is ruled into rows and columns. A worksheet is larger than any real book, however, having 65,536 rows and 256 columns. The rows are numbered sequentially starting at the top, and the columns are identified by letters. The first 26 columns are A through Z, and subsequent columns are assigned double letters, starting with AA, AB, and so on up to IV. You rarely use all the rows and columns in a worksheet, but it’s nice to know they are there if you need them.
At the intersection of each row and column is a cell. Each cell is identified by its column and row. For example, cell B3 is located where the second column and third row intersect. A cell can contain one of three things:
- Text
- A number
- A formula
It’s the third item, formulas, that gives Excel its power. With formulas, you can perform calculations on data in the worksheet. These can be simple calculations, such as adding the numbers in two cells together and displaying the result in a third cell, or complex calculations, such as determining depreciation for tax purposes. Figure 1. shows a simple worksheet that illustrates the basic components of a worksheet.
Figure 1. The fundamental components of an Excel worksheet.
Worksheets are organized into workbooks that can contain one or more individual worksheets. Each worksheet in a workbook has a tab at the bottom of the screen, and you can display a worksheet by clicking its tab. The workbook is the unit saved to disk in an Excel file.Excel can also display charts based on data in a worksheet. Visual representations of data are a powerful way to view and interpret information.But enough about Excel! This is not a book intended to teach you about Excel, and the included templates have been carefully designed so anyone can use them, regardless of their level of experience with Excel.
Why Excel and Not Quicken or Money?
As you probably know, several specialized home finance programs are on the market, the best known being Quicken and Microsoft Money.
Why would you want to use Excel for your finances instead of one of these programs? That’s a good question, so read on.
Most basically, these programs are not free-although they occasionally are provided free as part of some promotion. Excel is not free either, of course, but many people already have Excel as part of a software bundle that came with a new computer and they can start using these templates without any extra expense.
Another consideration is that the dedicated home finance programs are very complex. This is unavoidable when you try to include every possible feature in a single program. With checking accounts, mutual funds, budgets, stocks, taxes, retirement planning, and who knows what else crammed into one program, there’s just no way you can have a simple and easy to use program. Don’t get me wrong, I think these programs are great for some people, but if you want clarity and simplicity, they might not be the way to go.
The final factor is flexibility. Although Quicken and Microsoft Money are powerful programs, they do not offer any flexibility. You have to do things the program’s way, or not at all. What if you cannot get the report you need or display your financial information in the way you want? Too bad, you are out of luck. With Excel, you have essentially unlimited flexibility to do things your way. If the templates provided with this book do not suit you, you can change them as needed.
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