Are you ready to get started on your budget? It might seem overwhelming at first. How do you categorize everything? What about fluctuating expenses or happen once a year?
The best thing to do is take a step back and look at some practical steps towards creating a first budget. Remember that you can always go back and change a few things, it will remain a work in progress.
Goals are important, but a budget should first focus on your income minus expenses. Look at the numbers you’re dealing with and you will eventually be able to have an idea what to do and come up with a plan. Once you have a grasp on that, you can begin planning on saving for vacations, desired items, etc…
By making a budget, you are committing yourself to getting out of debt.
Use free tools at your disposal
A great resource available to Canadians is the budget planner from the Financial Consumer Agency of Canada
It is a free platform that allows you to save and review your budget online and compare to other average Canadians. You will get a unique key that will allow you to save, update and access your information.
Head over on the website and check it out.
Start with Your Net Income
First, figure out your net income for each month. This means your income minus taxes, insurance, RRSP deductions, and so forth. At this point, you just need to gather up all the numbers. Go have a look on your pay stub, all the information is there for you.
Find out where your money is going.
To have a clear clear view on how to set up your budget for success, you’ll need to figure out your monthly expenses.
Write down ALL your expenses so you can determine exactly where your money is going. Look at your bank statements and pay stubs if you don’t remember everything by heart and you’ll be able to fill out all the sections.
The great thing about the budgeting tool is that you can set all your expenses based on their frequency. The user interface is really well made and makes inputting your information very efficient.
Stop and Look
At this point, stop and take a look at what you’ve got so far. Are your expenses greater than your income? You should have realized by not that you might have to cut back significantly or increase your income. This might mean you will need to work extra hours, get a second job, sell stuff on marketplace and unsubscribe from services you don’t really need, etc.
Compare and track
Once you get to the end you’ll have all your income and estimated expenses filled out. have a look at thee summary, the platform will calculate all your categories and let you know what you need to work on.
Keep track of the real numbers over the next month and see how much they differ. Remember that you can always go back and change a few things, it will remain a work in progress.
Stick to it, you will be well on your way to a workable budget!
Related links
FCAC Budget Planner
Financial Consumer Agency of Canada Website
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