You don’t need to be a math or economics whiz to create an effective budget. It does require some time, motivation, effort, and follow-through, but once you’ve created your budget and gained some financial peace of mind, you’ll probably find it was well worth it.
Follow these steps to create an effective budget:
• Use a worksheet. It doesn’t have to be fancy and there are some good examples available online. Try visiting moneymart.ca/budgeting for a free download of their worksheet.
• Get your paperwork together. Take the time to find pay stubs, bank statements, utility bills, auto and renter’s insurance bills, and any other paperwork that can help you determine your income and expenses.
• Enter your income and expenses. Refer to the documentation you gathered and enter your monthly income into your budget.
• Adjust your expenses, if necessary. Total your income and expenses — hopefully, you’ll find that your income is higher. If so, decide what to do with your extra income, whether it’s putting more money into savings or paying off a credit card. If your expenses are higher, decide which expenses you can lower, if not eliminate.
• If you’re still finding it next to impossible to control your spending, try using a prepaid credit card such as the one offered by Money Mart. Because it’s prepaid, it automatically has a built-in spending limit set by how much money is loaded to the account. It’s a great way to control and reduce your spending habits.
Review Your Budget Each Month
Once you’ve completed the steps outlined above, you’ve successfully created your budget. However, your work isn’t quite done. Revisit your budget each month to see if you’ve stayed on track or if you need to make further adjustments.
More information on this topic is available online at www.moneymart.ca.