Managing money is a balancing act.
Monthly budgeting can help you stay focused on your finances, and therefore less likely to give into impulse purchases.
The most crucial thing for proper budgeting is to keep every receipt so you can figure out how much you are spending versus how much you are saving. Then, on a monthly basis, you can add up the amount of money you spent on the following items (where they apply):
- Housing (mortgage/rent, property taxes, insurance, heat, hydro, water, property maintenance, condo fees, home phone, cell phone, cable, internet, etc.)
- Food (groceries, restaurants)
- Clothing (purchases, cleaning, repairs)
- Transportation (loan/lease payments, insurance, plates, fuel, parking, maintenance, etc.)
- Household Expenses (property improvements or purchases, cleaning/help, pets and pet care, etc.)
- Personal Care (medical, dental, vision, etc.)
- Personal Insurance (life insurance, disability insurance, health insurance, etc.)
- Loan Payments (credit cards, lines of credit, investment loans, student loans, etc.)
- Capital Accumulation (emergency fund, education fund, retirement, etc.)
- Lifestyle/Miscellaneous (donations, personal gifts, regular vacations, entertainment, recreation, subscriptions, cigarettes/alcohol, personal allowance, club dues, lotteries, etc.)
By reviewing your budget on a monthly basis, you will notice any unnecessary expenses right away, be able to decide whether or not they should continue, and you could even invest leftover money to help with future costs (expected or unexpected).
Budgeting can also help you determine approximately how much money you will have in any number of weeks/months/years if your spending habits stay the same. Ultimately, the earlier you adopt a budget-conscious mindset, the better off you'll be in the long run.
We know how to budget effectively and we have solid resources to share (like this monthly budget worksheet).
To ensure you are on the right track with your finances, book your free consultation today.