How to Create a Personal Financial Budgeting System – Vancouver is great | Gmx Pharm

These simple budgeting steps can help you gain more control over your finances and build a bright financial future.

How much did you spend on travel and entertainment in the last year? Now you might be thinking, “That’s a bit of a stretch,” right?

If you don’t know how much you’ve spent in certain areas, don’t worry – you’re not alone. A 2019 report showed that only half of Canadians have a budget.

Very few people like budgets. A lot of people think of adding up numbers here and there when they budget, and they don’t want to have anything to do with it.

Yes, budgeting involves numbers, but more importantly, they relate to your finances. If you’ve ever thought of looking at budgeting as a daunting activity, here’s an easy way to do it.

Write down your total income

The first step to budgeting is knowing how much income you will make. If you have multiple sources of income, add them up.

Note that the total income you use for your budget is your net income. Your net income is what you get after taxes and wage deductions have been deducted.

Determine what you spend on

This should be easier than you think. Your expenses include things like groceries, rent or mortgage, utilities, transportation, travel, entertainment, and childcare.

Some expenses are set for each month. An example of a fixed cost is your rent.

Your rent doesn’t fluctuate monthly, and you know how much of your income is left over for those expenses.

On the other hand, expenses like groceries vary every month. Your grocery expenses may be similar, but they aren’t exactly the same every month.

If you’re not sure how much you’re spending on specific items, check your past bank statements to get an estimate.

A simple monthly expense list might look like this:

  • Rent: $2,000
  • Groceries: $500
  • Childcare: $1,000
  • Clothing: $300
  • Transportation: $100

Total cost: $3,900

Identify your financial goals

Suppose you are planning to buy a house in the near future; You can save money every month for this goal.

Identify how much you will need for a down payment on the house and how much you will need to set aside monthly for that financial goal. Include this amount in your budget.

If you are in debt, you can also plan to pay off your debt in your budget.

Match your net income to your expenses and financial goals

Let’s say the amount you need to save monthly for a down payment on the house is $500.

If your monthly net income is $5,000, you can allocate $500 of that amount to your deposit goal. You would have $4,500 to effectively allocate to your $3,900 expenses and have $600 left over.

You can then allocate the $600 to whatever savings goal you choose or use it to pay off outstanding debt.

Track your budget

In practice, you may end up spending less than planned or exceeding your budget. The only way to know this is if you track your spending.

Pro tip: Don’t leave your expenses unaccounted for for many months as they can get mixed up and make budgeting even more difficult.

A good old fashioned way to track your budget is to review your bank statements and enter the numbers into a spreadsheet like Google Docs or Excel.

Alternatively, you can use a budgeting app or software that connects to your bank accounts. The banking apps can extract your expense data and group them into expense categories on your behalf.

You can easily see which areas you are spending the most on or which of your spendings are exceeding your planned budget.

Budgeting helps you know where your money is going. It’s easier to plan when you have more accurate estimates of your income and expenses. A budget allows you to allocate your income to important financial goals and avoid spending on unnecessary things.

How can you budget better? First you have to start.

Getting started is the first step in getting used to budgeting. Then you have to be consistent. Consistency helps you plan your finances for the short and long term.

Identify your income, estimate your expenses, list your financial goals, allocate your income to your expenses and financial goals, and track your budget.

These simple budgeting steps can help you gain more control over your finances and build a bright financial future.

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