Budget Spreadsheet For Home And Business: The Benefits And Dangers
There is no doubting that the development of the spreadsheet was a great step forward in the world of finance and accounting. Even when they were rather cumbersome as they were with the original Supercalc (the first spreadsheet I used a long, long time ago) they still represented a great saving in time; if they were used properly that is. Spreadsheets are far more sophisticated these days and I use Excel and Numbers most days not just for budget work but all sorts of tasks; spreadsheets are wonderful, but they can also be dangerous if used as a serious budget spreadsheet.
How, you probably ask, can a budget spreadsheet be dangerous? If it is for a home budget then the damage can only be small scale, but nonetheless personally devastating if you make a mistake and then perpetuate it in such a way that an error accumulates into a debt before you notice it. To prevent that happening, double check everything on the spreadsheet to ensure it makes mathematical sense. Once you are sure the spreadsheet has been set up exactly right (and anything other than exact is wrong) then you can use it confidently every week or month as part of your home budget monitoring. As a precaution lock all the formulae cells once you are sure they are correct.
The very same budget spreadsheet software can be used for business; indeed it can be used by governments and other organizations alike. Therein lies the real danger; as a former management accountant I know that if you start to use complex budget spreadsheets for large and complicated budgets, then the risk of compounding errors increases with every new link and every new worksheet that you add. The larger the spreadsheet network becomes, the harder it is to spot discrepancies that could throw the budget into the world of financial fantasy.
Another danger with a large budget spreadsheet to be used in business is that spreadsheets for the same purpose can be created in numerous ways; they are personal to the employee who creates them. If that employee leaves, then it is very difficult for the replacement employee to pick up that spreadsheet and understand it immediately unless it is fully documented; but who ever documents their spreadsheets? I never did, nor does anyone else I would guess.
For serious large business budgeting a good double entry accounting software package with a budgeting facility is better than a budget spreadsheet every time. For the home budget, a spreadsheet is fine, if you really understand how it works; after all most household budgets are very simple and there are lots of templates around you can use.
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