Your Budget: Taking Control of Your Finances

Creating a budget is an essential step in your financial well-being, allowing you to manage your monthly income in an efficient and effective way that will make it possible for you reach your financial goals. A budget is a vital step in tracking your family’s spending, managing debt and enabling you to put money away in order to invest for the future.

In a poll released earlier this year by the Bank of Montreal, it was found that 27% of Canadians between the ages 18 and 34 have not yet started saving for retirement, while another 2012 poll released by the CIBC indicates that approximately 45% of Canadians have no emergency fund set aside.

The statistics are alarming, and they reflect the fact that many of us are not where we would like to be financially.  Fortunately, learning to set up and adhere to a family budget is a solution that, with a little guidance, we can all learn to do effectively:

Step 1- Evaluate Your Monthly Income

In order to effectively evaluate your monthly income, gather together your paystubs for the previous three months and determine the average amount of money you that is available to you on a monthly basis.

If you work on commission or if your income is variable for any reason, it’s probably better to attain an average spread over a longer period of time, say the previous 6 to 8 months.

Step 2- Evaluate Your Expenses

Much the same as evaluating your income, this step is meant to allow you to obtain a monthly average for each of your bills and expenses.

Don’t forget to include cash expenses, although if you have not been in the habit of keeping receipts to this point it may be difficult to accurately assess your cash expenditures.

If at all possible, from this point forward, set aside a few minutes each day to record your daily cash spending and file receipts to ensure an accurate record of where your cash is going from this point on.

Step 3- List and Allocate

List your monthly income and expenses carefully, including due dates and pay dates and then allocate your money accordingly.  Remember to include a category for savings and one for your emergency fund.

Examine your new budget carefully and take this opportunity to cut unnecessary expenses and track your spending accurately each month.

Step 4- Stick to It

Reviewing your budget regularly and sticking to your plan can go a long way toward improving your situation, helping you manage your debt and reducing your financial stress.

While setting up and following a family budget plan may take some getting used to, it’s the surest way to control your spending and keep you on track so you can move on to controlling your money wisely instead of allowing your money to control you.

Contact IFG today at 705-740-9909 to discuss more ways to take control of your financial future!