After helping people with financial issues they sometimes ask me, what is budgeting, what is monthly budget and how do I set one up?
Why Have a Family Budget?
Managing finances can be overwhelming, but creating a Personal Monthly Budget can be a powerful tool to help you reach your financial goals.
By setting a budget, you can take control of your money and make sure you have enough to cover your expenses and still have some left over for the things you enjoy.
Here are some tips to help you create a budget that works for you and your family:
- Be honest about your income and expenses. This will help you see where your money is going and identify areas where you can make adjustments.
- Be realistic about what you can afford to cut from your spending. Instead of eliminating all “fun” expenses, try to find a balance between cutting back and still allowing yourself some room to enjoy life.
- Remember that a budget is a tool to help you manage your money, not a punishment. It’s important to find a balance between cutting expenses and still allowing yourself some room to enjoy life.
- Look for opportunities to increase your income, such as taking on a side hustle or asking for a raise.
- Use a budget worksheet like the Personal Monthly Budget to help you track your income and expenses and see where your money is going.
Creating a budget may seem daunting at first, but it’s a powerful tool that can help you take control of your finances and achieve your financial goals. With the right mindset and a good plan, you can create a budget that works for you and your family.
Remember, if you are struggling to make ends meet, speak with one of our friendly Licensed Insolvency Trustees or consider a consumer proposal to reorganize your finances.
Making smart choices and smart decisions about housing is key to managing your finances.
It’s important to remember that your housing decision should be based on your needs and financial ability, rather than external pressure.
By being mindful of your housing expenses and making smart choices, you can ensure that housing is not a budget problem area for you and your family.
Here are some tips to consider when making housing choices:
- Consider all costs associated with your housing decision, including taxes, insurance, utilities and maintenance expenses.
- Base your decision on your needs and financial ability, not on external pressure.
- Take the time to research and plan before making any major housing decisions.
- Reach out to a professional for advice if you have any questions or concerns.
By following these tips, you can ensure that your housing choice is one that fits within your budget and meets your needs. Remember, being mindful of your housing expenses and making smart choices can help you take control of your finances to achieve debt freedom!
Many families spend too much for food, others do not have enough.
Shopping at low cost grocery stores and cutting back on restaurants and fast food outlets can really help reduce the amount you spend.
A food budget can be a really tricky area because so many life events involve food and we can be significantly influenced by our entertainment choices.
Changes in a family’s food bill require planning but careful tracking can help you become aware of your spending and shopping habits and help keep costs down.
Families sometimes buy cars they cannot afford.
They trade them in long before their usefulness has expired, and roll unpaid debt from the last car over to the new car.
Changing monthly transportation costs can be important when a person is looking to improve their ﬁnancial circumstances through a bankruptcy or proposal.
Sometimes a more fuel efficient vehicle or public transportation can significantly reduce your transportation costs.
Also, planning for repairs and general maintenance will ensure you’re not scrambling or turning to credit to cover these costs.
Debts and Loan Payments (10%)
This is the number suggested by most ﬁnancial planners.
It is an ideal number and somewhat laughable for the person struggling with a heavy debt load. This number should be regarded as something that might be possible in a perfect world.
For the struggling debtor it is an indicator of how steep your ﬁnancial problem may be.
Although it would be great if family budgets restricted themselves to only 10 percent debt, it is more likely that you need to look at making cost savings in other areas.
But, keeping debt at lower levels in relation to net monthly income is always a good idea.
Savings and Insurance (10%)
Many ﬁnancial planners work in the ﬁnancial and insurance industries.
They have a strong and healthy bias towards insurance, investments and savings. Sufficient insurance and savings helps protect you when life throws those financial curveballs.
We all understand that these targets would be unattainable for people struggling with the burden of consumer debt.
Recreation and Entertainment (5%)
Debt can be so depressing. People get weighed down by their money problems.
Many people who have ﬁnancial difficulties actually increase their entertainment expenses in trying to escape the frustration of the stress.
So, we use credit for a vacation, special outing, or for tickets to a concert or sports event.
We know we may not be able to afford it but we long for ourselves and our family to be able to escape from the constant stress of ﬁnancial limitations.
If you’re looking at your financial budget and wonder how you can save money, entertainment is usually a place where adjustments can be made. For example, there are many free, stress relieving entertainment choices in your community that are suitable for any age.
This is one area along with food that a wise shopper can make an enormous difference.
Proper clothing is important. Shopping sales, discount warehouses, and clothing swaps are just a few of the ways you can still look great while maintaining a balanced budget.