Budgeting and Beyond

It's 2018 and a new adventurous year is ahead for all of us. This might be the year you purchase a new house, a new car, take that dream vacation, welcome your first child, or take the plunge into entrepreneurship. There are countless opportunities, many roads to travel and so many memories to make. To make the most of the year and the goals you want to achieve, you should take note of what will need to be done, track your progress and adjust course if things change - in other words, have a plan and stick to it.

A budget is simply putting together a plan and being committed enough to stick with it, making adjustments as needed, to reach your end goal. Budgeting has gotten a bad rap over the years, with people assuming that you have live a restricted lifestyle to save any cash. A budget helps you prioritize your wants and needs, focusing your spending habits on achieving the lifestyle you want without the burden of unnecessary debt.

Creating a budget is as simple as tracking your expenses, determining where you want to spend your money and adjust your spending accordingly. This does not need to be complicated - a simple spreadsheet will do.

Record your monthly income and your fixed expenses per month. Fixed expenses can include items like your mortgage or rent, utility costs (such as water, electricity, heating bills), car loans, monthly insurance premiums, car loans, phone/cable/internet plans, etc. These are all items that you pay each month and are fixed, meaning the amounts rarely change.

Next, record your variable expenses, such as entertainment, restaurants and take-out, groceries, gas, liqueur, your morning coffee, etc. These are the items that can change month to month.

Lastly, record any savings and/or debt repayments, such as any contributions to other accounts, such as RRSPs, TFSAs, OSAP repayment, average credit card debt, personal loans, etc.

Add all of your expenses, savings and debt repayment values together.

Subtract that value from your monthly income; this may result in a break even, a surplus or a deficit.

If you have a surplus, determine where to channel that money, such as savings or debt repayment.

If you have a deficit, take a look at your variable expenses and prioritize them to see where you can save money. This might mean cutting the cable or eating out only once a month instead of every week. If you really want to live within your means with the budget you create, then you will find a way to make the necessary adjustments, even if it means a lifestyle change.

Take your time to create your personal budget and ensure it is the right fit for yourself. Don’t run into this and make quick decisions that you may not stick to. Make it a priority to track your spending and make plans to ensure your success for 2018.