Ever wondered where all your money went? or Are you hiding from creditors, and scared to answer the phone to an unlisted number? Or do you live paycheque to paycheque and wish you could find a way to make it stretch further? Regardless of your reasons for wanting to gain control of your finances, having a good budget in place is the best place to start.
Personally, I live on a very tight budget and have accrued almost $60,000 in debt due to student loans, credit cards, and my car. I’ve also developed some health issues that have made it difficult to obtain gainful employment for long periods of time. And so for me, a budget is essential.
Here are several tips I’ve collected over the years that might help you along your journey to financial security. Most of these tips, along with several others you can find on my Pinterest Board.
- Calculate your income. If you want to make a budget that works, you need to know exactly how much money you make.
- Create a budget, and stick to it.
- Do it monthly. By getting into the habit of doing your budget every month, and sticking to it, you are more likely to be prepared for the little things that come up. The extras that we sometimes forget about.
- Don’t be alarmed when your expenses add up to more than you income. This is a common outcome when people first start budgeting. Just rework it taking care of the fixed expenses first like your rent or mortgage, car payments, etc. then look at the variable expenses: food, gas, entertainment, toiletries, etc. with what’s left over.
- Don’t despair. It’s likely that at some point you’re going to hit a wall and feel depressed with your financial state. You’re going to want to go back to the way things where before you started this whole “budgeting thing”. Remind yourself of why you’re doing this, what you’ve achieved so far, and talk to friends about it.
- Evaluate your spending regularly. If you’re married or in a committed long term relationship, do this with your other half so you can both work on this together. Look at where your money is going each month and discuss what changes could be made.
- Take inventory of your finances and see where you can make some changes, this includes where your investments are, your savings accounts (is there somewhere else with a better interest rate for you), and chequing accounts fees. Look at everything.
- If you’re one of those people that absolutely needs to have a bit of money to spend on random things, build a bit of money into your budget to cover this.
- Know your balance. The most important thing about budgeting is spending less than your income, if you don’t think you can do this, then you should look into other ways to make extra money.
- Look at your annual costs. When doing a budget it’s easy to forget the annual costs, until they come due. To insure that you are prepared for these set up a savings account and put a portion of that fee into it every month. I like to divide each of these fees by 11 and put that amount into my savings account every month, that way if I have a bad month where I don’t earn enough I can make a small adjustment to the amount I deposit into the account without having to worry.
- Try to save for a rainy day. Work on including into your budget a small amount that you can put away each month so that when something unexpected happens you have something to fall back on without incurring additional debt.
- Find out how much you spend each year on dental, medical, prescriptions, personal grooming, clothing, food, gas, etc. and create a monthly figure to cover these things.
- Make a game of it where if you have money left over at the end of the month (meaning you spent less than budgeted) you divide those funds between him, her, and savings/debt repayment. This will help give all involved an incentive to spend less that budgeted.
By creating a budget, sticking to it, and reviewing it regularly; you can gain control over your finances.
So tell me, what are some of your best budgeting tips?