Tips on Budgeting

You are ready to set your budget but not sure how to start. Here are some tips to get you started on a budget that works for you:

• Get organized – staring at a pile of current and previous bills will only make organizing your finances and saving more difficult.
• Go through your last chequing statement and break down your monthly on-going expenses into categories such as housing expenses, utilities, childcare, loan/credit card payments and car expenses. This step should cover expenses that are recurring and are about the same amount each month.
• For the next month keep a small pad and write down everything you spend. That means everything – newspapers, coffee, lunch, movie tickets (and popcorn). It doesn’t matter how small the amount, you need to account for it. Don’t forget to include what you spend in credit card purchases as well. Basically, if you spend it – track it.
• Once you have all the spending information – add that into the expense categories you developed with your last chequing statement. Double check that you have not added any expenses twice. You may need to add a category, just try not to make too many categories.
• Now add up all the amounts in each category and then total all your categories.
• The totals for each category will be your starting point for your budget.
• Take the Financial Cardio test and see where you fall on the financial fitness scale.
• If the total budget amount puts you in the secure category – great.
• If your budgeted amounts put you in either the stable or surviving category then it is time to make some changes. The only way to make a difference is to either increase your income or decrease your expenses. For a list of saving tips check out our September 2007 article "Making Saving Easier – Tips for Saving".
• Now, keep track of your budget as you go through the month. At the end of the first month measure how you did.
• Did you over spend in a specific category? Is the overage due to a one-time or unplanned expense? Is your budget unrealistic? Remember though, increasing one budget category means decreasing another. Make adjustments in your budget as necessary.

Starting, tracking and sticking to your budget is time consuming, but it is an investment that can pay off quite quickly as you gain a clearer understanding of your finances and move towards meeting your spending and savings goals. Not sure where to start – as your financial advocate we are there each step of the way. Come on in, give us a call or drop us a line. We’ll show you how budgeting can work for you.