The most favorite part of my job is helping people put together a budget, yet we often hear that for many people, this is one of their least favorite things to do. I meet many interesting people from all walks of life and have a window seat to their hopes and dreams. A budget is a tool to realize these hopes and dreams. I think the most common misconception is that people who follow a budget don’t have any fun. The consequences of not following a budget can lead to financial stress including lack of savings, increased debt, even bankruptcy. Along with the 5 Steps to Budgeting, a budget template, and an example of a pay-cheque planner, here is a list of some tips to help you get started:
- Start with fixed expenses
- Be organized
- Transfer money to your savings account each pay
- Update your budget regularly: new baby, new car, new house/apartment, increase in pay, job loss, college/university, marriage/common law, separation, retirement, car loan paid in full…
- Include an emergency savings account
- Use the envelope system to manage cash expenses
- include entertainment in your budget to have FUN
- Don’t buy more groceries than you can eat
- Put money aside for periodic expenses
- Keep track of your bank account
- Don’t buy what you don’t need
- Budget should be realistic
- Pay your bills on time to avoid late fees
- If you are carrying a balance on your credit card, make a plan to pay it off.
- Bring your lunch
- It is never too early to save for retirement
- Make a plan for holiday spending and stick to it.
- Stick to your budget
