Growing a Money Mustache using Excel [for fun]
Mustache and Excel?!? Sounds as unlikely as 3D pie charts & Peltier. But I have a story to tell. So grab a cup of coffee and follow me.
Few months ago, I chanced up on a highly entertaining blog on money, retirement & living a kick-ass life. Reading Mr. Money Mustache is much like I am talking to myself. Almost all of his money philosophies, values & hacks are similar to what we practice at Chandoo household. Immediately I got hooked. In a span of 2 weeks, I read more than 100 articles, often making Jo suspicious what I was doing so much on her iPad.
At this point, you must be thinking -”Dude, what has all this got to do with Excel?!?”
And I am coming to that. One of the ideas Mr. Money Mustache preaches is small regular expenses can add up to massive amounts of cash (or ‘stash as he calls it) over several years. Now that we do not have a full time job, live in a small town & crave little, we barely spend anything. But I can relate to his idea. For example, if you spend a few dollars everyday at local coffee shop, over 10 years, this could add up to more than $10,000. Money that could be used for other worthy goals like early retirement or starting your dream company. Mind you, I have nothing against coffee. In fact, I brew two cups of lovely cappuccino every morning so that Jo and I can savor it before the kids wake up and start the hulk_in_the_house program. It is another thing that the last time I bought a cup of coffee is when I was in Australia in June. But the important idea here is that regular expenses should be carefully monitored and pruned.
“What?!? You are talking about coffee and kids. Where is Excel?!?”
Ok, I am done with the build up. So one fine morning, I emailed Mr. Money Mustache, introduced myself as somewhat spreadsheet skilled and shared a file I created with him, using which community at his site can see how regular expense cuts can impact their savings. He was kind enough to publish it here.
A growing mustache chart
Well, I am not sure what else to call it. So lets stick with growing mustache chart. Here is how it works:
- You enter a sufficiently large number ie the money you want to accumulate to retire or do something equally awesome.
- You also enter your regular expenses (daily, weekly, monthly, annual or one time) and amounts.
- Then it magically calculates how much money you would save by cutting them.
- All this is shown in a dynamic chart that depicts your target and actual as mustaches
See this demo:
This is so cool, how is it made?
There are 4 steps to our growing mustache Excel chart.
1. Calculating future value of regular expenses
Question: If you consume $3.50 latte every day for next ten years, how much would you spend?
Answer: Gee! Sounds like a big problem, let me grab a cup of coffee first!
On a more serious note, the future value of these little expenses depends on rate of return as well. That is, instead of gulping down $3.50 in a hurry, if you saved the money the return you get on yearly basis.
For our calculations, we can assume a 7% return. This gives a future value of$18,498.
You can use the formula
=FV(7%/365,365*10,3.5) to get this value.
So the multiplication factor is 5,285 (18,498 divided by $3.5)
For our calculations, we can use a simple multiplication factor table so that we can focus on growing mustache than financial mumb0-jumbo.
2. Calculating Totals
Once we know the future values of all such regular expenses, we just need a small table like this that shows the totals:
3. Create a bubble chart
Next, we create a bubble chart with 2 bubbles. 1 for the actual mustache & 1 for target mustache.
4. Convert bubbles to mustaches
Hermione would know a great spell to instantly turn our boring bubbles to mighty mustaches (bulla-mustacium ?). But since we are muggles, lets focus on Excel trickery.
We need the chart on right from our bubbles:
First get a nice handlebar mustache image from web, like this:
- Then, copy the gray color mustache (ctrl+c)
- Next, select outer bubble (target) and press paste (ctrl+v)
- Now, the bubble becomes mustache!
- Repeat the steps for actual bubble too.
That is all!
Download Excel Mustache Chart
Click here to download this chart and play with it. Examine the formulas in “Stash chart” sheet to see how it works.
Do you like the growing mustache chart?
I really liked how this turned out. Simple yet effective. Readers at Mr. Money Mustache site loved it too.
What about you? Did you enjoy this trick. Are you planning to cut any regular expenses after reading this? Please share using comments.
More on Excel and your money
I believe in being frugal, consuming less and living a simple life. So naturally we talk about using Excel to keep track of your expenses, investments, understand the impact of small changes etc. Check out below links to see more on Excel & your money.
- Expense trackers in Excel
- Household Budget Tracker
- Stock Portfolio Tracker
- Excel retirement calculator
- Interactive mortgage payment calculator
- Mutual Fund Portfolio Tracker [for India only]
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