I love this line that I read in an article from Women’s Day on budgets “a budget is the ticket to financial happiness, not the straitjacket I feared it would be.” Don’t fear the budget, embrace it. The key is just paying attention to where you are spending your money.
If you have never done a budget before, then here are the basics.
1. Record your monthly income – take home pay after deductions, plus other income such as child tax credit, investment or pension income.
2. List your fixed household expenses – mortgage/rent, property taxes, appliance rentals/maintenance plans
3. Add variable household expenses – utilities (hydro, water, phone, internet), groceries, gas, car maintenance, pet supplies
4. Risk – fixed expenses – auto insurance, property insurance, life/disability/critical illness insurance
5. Don’t forget the children – if you have any, you will know that they aren’t cheap. Don’t forget to add all of their costs in. Diapers, clothing, child care, sports & activities, etc.
6. Debt repayments – car loans/leases, credit cards, taxes
7. Savings/Planning – RRSP, RESP, TSFA, Emergency fund – make sure you are putting some aside for the unexpected.
8. Other – Entertainment, pocket money, gifts, memberships, etc.
Now add up all the expenses and subtract from your income. This will tell you if you are spending more than you make or if you have a surplus. You can now go back and make adjustments to make things balance out better. Each month record what you actually spent and then make adjustments for the following month.
Sounds simple enough and it can be. The key is to take a few minutes to make a plan and then try to stick to it. Be realistic in your numbers, as it’s always best to start with a true picture and make adjustments form there.
We are here to help and are happy to sit down and do a cash flow plan with you. Give us a call to make your appointment today.