90% of Canadians say they have more debt now than 5 years ago, while only 47% plan their spending using a budget. Planning a budget can help people pay bills on time covering unexpected emergencies and reaching present and future financial goals.
How to Set Up a Monthly Budget
Budgeting is a great way to find out if you have problems with overspending in some areas. It is a useful exercise to write down your spending habits for a certain month or two in order to compare them.
1 – Figure out total income
Determining how much income you have is the first step to set a monthly budget. Add up all your income sources, including salaries, pensions, interest income, tenant rent, child support, etc. Make sure to include a spouse’s income, in case you are married. Calculate the total amount and write it down to determine how much money you earn on a monthly basis.
2 – Track your expenses
Keeping track on your monthly spending is the best way to estimate your expenses. Before writing down your actual expenses divide them in two columns – flexible and fixed. The money you spend on food, entertainment, clothing, for example, will come to the column with flexible expenses. Utilities, mortgage or rent payments, loan repayments will come to the fixed monthly expenses.
3 – Calculate the difference
When you have added up all your income and calculated all your monthly expenses, it is very easy to figure out the difference. If you get the positive number, it means that you spend less than you earn. That’s great! Congratulations! If you get a negative number, it means that you spend more that you earn and that’s a right time to think where you should trim your expenses. Look through your notes a couple of times to get a clear idea of what you are doing wrong.
Creating a budget is a very useful thing to do as it really helps to keep balance between your income and spending. The next step is to make adjustments to this monthly plan in order to achieve financial goals.
In fact, it is very easy to record your expenses, all you need is to start and build a habit to be on track. Still, if you haven’t managed to successfully plan your budget from the first try, be sure that Canada Loan Search company is always ready to provide a fast financial help for anyone in need of a small payday loan.