The first thing you need to know is that you should budget no matter how much you earn.
- Keeping track of your income and expenditures is the best way to help you achieve your financial goals.
- Look for a way of budgeting that you feel comfortable with and best suits tracking your spending. It doesn’t matter if you choose to use Excel, Quicken, or a notepad… the important thing is to just do it!
- A budget allows you to see how much you are earning, spending, and saving, but more importantly, how much more you can save. Download a Sample Budget.
Customising Your Budget
- Time. Choose a time frame (for example, weekly, monthly, quarterly).
- Categorize. Have as many categories as you like. This is your own personal budget and the more you customize it to reflect your activities, the easier it will be for you to identify where to cut expenses so you can save more.
Remember: you can always go back and change the format of the budget if you find another way that suits you better.
- Track. Track your income, expenses and savings. If you decided to include savings as a regular amount of money every month, this will go in the expense section of your budget
- Prepare. When making your budget, be sure to leave room for unforeseen situations. The more flexibility you build into your budget, the easier it will be to stick to it.
- Take action. See the result (income – expenses = potential savings). If this is positive, what you have left is a surplus (your potential to save). If it is negative, you have a deficit (negative savings). Don’t panic, as this won’t help you find your way out of the negative savings hole.
DeficitYou only have two choices to correct a budget deficit: increase income or decrease expenses. The quickest and easiest option is to decrease expenditures but a longer-term goal might be to increase your income. But don’t forget: a budget deficit today has to be resolved immediately. Look into your Budget for areas in which you can cut expenses.
Save, save and save! It doesn’t matter how much surplus you have, you should always try to save as much as you can. Your budget surplus is the amount that you should be saving every month. Of course, by reducing expenditures or increasing income, you will be able to save more! Then, make sure your savings are earning interest.
-Evaluate the risk and return of your options.
-But beware of mouse-traps!
Mix and Match Your Personal Calender with Your Budget
There are certain times of the year when you will encounter non regular expenses. Major events, such as the car insurance due date, will impact your budget and are important to include in addition to your daily expenditures. Be sure to write down those important dates for you in your Calendar. Match those dates with your budget and you can even plan ahead and save for those special occasions.
Don’t forget to include birthdays of family and friends, anniversaries, holiday vacations, long weekends, etc…
Here are some ideas:
February- Valentine’s Day
May- Mother’s Day
June- Father’s Day
December/January- Christmas Day, New Year’s Eve
Personal Financial Tips
- Pay your bills on time.
- Eat more at home and less out.
- Take your food to work.
- Forgo the ice cream store and pop popcorn at home.