Using Spreadsheet (Excel /Google sheet) in Personal Finance - Series

Let us learn 4 Excel functions that are useful for personal finance

Introduction

Investment accounting methods in personal finance

Money is considered the most important ingredient in life. Usually money is always the talk of the town. We try to invest in many different ways. Money forms an integral part of our daily conversations, reading articles, and so on. We always try to multiply our money immaterial of our age or requirement. But the truth is different, and at some times, also bitter. Often the expected investment benefits are not met. The main reason for this is how we calculate and understand the investment return or benefit from the investments made. If the investment planning is done properly and the return expectations are understood, then the reward may be as expected. It is easy to plan and set our expectation realistically. The purpose of this article is to make a simple calculation of how investment planning can be done easily. Excel or google sheets will help us in this journey.

Spread Sheets (Excel / Google Sheets) in Personal Finance

When using the computer, there are many types of apps (software) that can be used for investment planning and return calculations. A software called spreadsheet is a solution that will be suitable for investment planning and return calculations. It is simple and easy to use for personal finance work. From Lotus 123 to today's Google Sheet, the software called spreadsheets has come in various forms. Microsoft Excel is the most popular spread sheet application used by many. We are going to learn how to use spread sheets for personal finance calculation. Most of us may not be aware that Microsoft Excel and Google Sheets are the same type of software. Various actions and calculations done in Excel can also be performed in Google Sheets. They can be performed in mobile phone android platform also.

To understand and use the planning methods using spread sheet functions, first you should have the basic information about spreadsheet, in particular, you need to use cell, row, formula, functions etc.

Excel Functions

Now we are going to use a kind of formula usually called a function in Excel. Functions are not only applicable to finance, we can use these function for text modification etc. Our focus is only on Excel finance functions. Please refer the image below to insert a function in a cell.

Personal finance calculation with Excel

Let's take a look at five methods of how to use excel function in finance. Four functions are used in these examples.

Four Excel functions and 5 methods to understand Excel in personal finance

1. FV (Future value)
2. Effect (effective rate)
3. Payment (PMT-Payment)
4. Calculating investment returns (XIRR)
5. Calculating our SIP investment Income as annual income rate 

Radha thinks he can buy a house in 10 years. Current price is  40  lakhs. Expected Inflation is 7%. Then how much money should he save now to buy a house in ten years?

To find the solution for the above requirement using  FV function in spread sheet  click here

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