Making it to the next paycheck can be hard for many people. In Canada, there are an estimated 3.4 million, or 9.5% of the population, living below the poverty line as of 2017. One of the best ways to make sure you’re going to make it is to create a budget and work to save money rather than spend it. Today, we’re going to go through the basics of creating a budget.
Why Should You Use a Budget
Rather than just working to spend less than you make, a budget helps you realize what areas might be wasting money. In addition, budget planning can help you track your spending with greater efficiency and even help you reach long-term goals. If you are having trouble paying your bills, knowing where your money is, making it to the next paycheck, or saving money on a regular basis, then creating a budget can be exceptionally useful.
The benefits to using a budget can include setting hard spending limits on extra costs, getting rid of your debt, reducing costs of things that you thought were “required,” and saving money for the things that are more important, like retirement.
How to Start Making a Budget
To begin creating a budget, you need to look at all short-term and long-term goals that you may have. This can be to pay off your debts, save for a house, or even retirement. Look at your emergency fund, or think about creating one. Your first goal should be to make sure that you have living expenses for the next three to six months should something go wrong.
Know Where Your Money is Going
Next, track your money to determine your overall income and current expense level. Every dollar you spend has an impact on your overall budget and what you are saving. This includes any money that’s being put on a credit card or into retirement accounts. This is where you can begin to learn money management. For example, if you buy a $2.50 coffee every other day, you could spend over $450 a year!
Use a Program Like Mint
To make the best of your spending money, use a program to track your spending. Programs like this will allow you to track all after-tax income, whether it’s a savings account, car payment loan, or traditional bank account. For two months, simply watch your spending like normal to see where you stand. From there, create budgets based on need and want. Examples can include shopping, food, or auto. On the other hand, you can go deeper with grocery budgets and family budgets. This can help you see exactly what money is being spent on the wants versus the needs.
Each week, you should look at what you’ve spent to see what was worth the money and what you want to hold off on the next week. This can help you recognize trends faster than most, allowing for more time to correct and save money. As an example, perhaps you have a habit of grabbing a treat from the store on bad workdays. You can adjust for this by bringing a sweet fruit to work with you so that you can eat that on the way home. Continue this each week to see your emergency fund grow and further understand your spending habits.
Meeting short term budgeting needs
At times, every Canadian needed help to cover monthly expenses even when they budgeted in advance.
iCASH offers loans with no minimum credit score requirements. This can help you manage cash flow and otherwise make ends meet when you have unexpected expenses or sub-optimal income.
The entire lending process takes less than an hour from the start of the application to getting your funds. There are no document requirements, no office visits and the services are available online any day of the year 24 / 7 because we never close.
When you need short term help with your monthly budget and expenses, get an online loan from iCASH, the premier short term lender in Canada.