The Budget. To most it’s a finance lifesaver to others, it’s a dirty word. Whatever your views on budgeting there is never a bad time to start or take a peek at where you can trim your expenses.
To create a budget that works for you it takes either yourself, if you budget on a single income or your significant others contribution, to start. There is nothing worse than starting out on two separate financial pages. Take a Saturday morning or a day that had no hustle or bustle for your family, sit down with your coffee and start planning your financial future.
First write down your goals. What do you want financially? Yes, you can be in charge of your finances. Be realistic. If you want that million-dollar home on a show string salary it’s not going to work. Try setting out small goals, like paying off your debts, having an emergency fund with three to six months of your salary tucked away in case a salary cut, or worse unemployment comes knocking, or bulking up that RRSP. Your goals will correspond to your life right now and your future, every one will be different.
Take your income right from your paychecks, don’t use your pre-tax salary or your budget will not work. What you budget for taxes is not what will be withheld, but that’s a good idea for the future, right?
Next using your previous months bills enter all the house expenses, mortgage, rent utilities, property tax and insurance. Be sure to include your groceries here.
Now that you have taken care of the house expenses move on to transportation expenses, be it car payments, insurance, and gas, or public transportation fee’s, here is where you will calculate your needs.
Before you get the personal expenses be sure to insert your debt repayment allocation from your Debt Snowball calculation.
When you have these squared away you can calculate what you have left. This amount should be split, not equally, between savings and personal spending. Earlier you wrote your savings goals, calculate what is reasonable each month to save.
You will now be left with a surplus, this can be divided into your personal expenses, clothing, entertainment, memberships, toiletries, and any other personal needs.
This way of budgeting takes care of the requirements first and leaves your personal expenses last. Saving really is investing in yourself and paying off your debts will result in either more savings or something off your wish list later in the year.
Next time we take each aspect of your budget and squeeze it until it screams, increases your monthly surplus.