The easy way to make a budget
The easy way to make a budget
- Making a budget allows you to achieve goals like better managing your money, making an important purchase, carrying out a major project, preparing for the unexpected, reducing your stress, and so on.
- To establish a budget, you have to start by making the most accurate possible list of all your income and expenses. There are electronic tools that can help you do this, and even give you an instant snapshot of your situation.
- Once you’ve drawn up your budget, it’s normal that you’ll have to make some changes. Your income should be higher than your expenses. Ideally you should be able to put money aside as well. Sometimes the problem can be solved by making a few small, simple changes. Other times, the best solution is consulting an expert.
6 reasons to make a budget
Do you struggle to pay your bills and make debt payments when they’re due? Are you trying to plan a wedding or your retirement—or to prepare for the birth of your first or third child? Got your eye on a new car or a cottage? Don’t know why your bank account is at zero at the end of every month? There’s never a bad reason to sit down and create a budget. Here are six important ones:
- To see where your money is going
- To find out what you can afford
- To get to the end of the month more easily
- To save up an emergency fund for unforeseen expenses
- To accomplish the projects that are important to you
- To reduce stress and anxiety (and sleep better!)
4 simple steps to make a budget
Before starting your budget, you need to have some key information at hand. For example, how much is your monthly phone plan? And how much do you spend on groceries, on average? The more specific you are, the more closely your budget will represent your financial reality.
Tip: download your bank account and credit card statements for the past few months. It’ll be easy to go back over your expenses and put them in the right category in your budget.
List your income
How much money is coming in each month? Your salary, social assistance or unemployment benefits, CSST compensation, pension, annuities, alimony and GST, QST and Solidarity Tax Credit payments. All of these count as income.
Fill in every amount that applies to you in our online budget tool.
List your expenses
Once you’ve gone over your income, it’s time for expenses. There are many different kinds: housing, transportation, food (groceries and restaurants), clothing, insurance, utilities (telephone, cable, Internet), leisure, pocket money. Don’t forget that you also spend money on others… Including your pets! These are regular expenses that you have to pay every month.
You also need to think about expenses that are predictable, but don’t come up every month: gifts, vacations, tuition, etc.
Finally, there are unexpected expenses that may arise, like car repairs or replacing an appliance that breaks down. That’s why it’s important to have an emergency fund equal to about 3 months of your salary: to absorb these costs.
Of course, your list of expenses will include monthly payments on your debts, loans, credit cards or lines of credit.
You should also put away a minimum of 5% of your salary for your retirement or future projects.
Once you have all of this information, enter the numbers in the online tool, category by category.
Use the online tool to analyze your situation
At this stage, our tool will compare your income and expenses
Are you spending more money than is coming in? On the other hand, do you have a comfortable cushion to put a little money away or even to accomplish a project you care about? The tool gives you an assessment of your financial situation.
It isn’t enough to make a budget. You’ll need to adjust it from time to time. If you notice you’re spending more than you’re making, it’s time to do something about it. The goal: make it balance. The idea isn’t just to pay all of your bills every month, but to eventually be able to save some money too.
Does your list of expenses have some unnecessary spending you could cut out? Sometimes, small purchases you make all the time can have a big impact on your budget.
Is too much of your monthly spending going toward your debt payments? If so, a counsellor in financial recovery may be able to help. Act now: make a free, 100% confidential appointment today.