Taking Control of your Finances Through Budgeting

In a time and age where what we want often trumps what we need it is time to reassess and take action. Few people are born with a talent for financial skills but it is something that can be learned through action. The best place to start is by making a budget.

What is a Budget?

A budget is simply an organized way of looking at your finances, it can be as easy or as complicated as you want to make it. It tells you where your money is coming from and when and how it's being spent. The thing to remeber is that it is flexible, your budget has to always change to match your financial situation.

Why Budget?

We all want to have money when we need it. Making a budget helps you plan for short-term goals like paying off your credit card and long-term goals like buying a house.

Who Should Budget?

EVERYONE!! no one else is going to do it for you. You have to be aware of your financial situation. It will give you the confidence to take action.

Know your Values:

Typically people spend their money on what is most important to them whether that is to be financially secure and put money away for retirement or to have the best quality of life today and spend money on a family vacation every year. Take your values into consideration when looking at your spending, this will help you get a better understanding of what you spend your money on and where you can cut down if necessary.

Setting Goals:

Goals give people direction and help them to achieve what they want out of life. Sit down with your family and decide what your goals are, then group them into a short-term categor and long-term category and prioritize them from most important and needs to get done right away to least important. Make sure to put money aside from your spending plan to reach these goals and think about any conditions and circumstances in which changes need to be made to reach your goals.

Getting Started:

You can make a budget on a daily, weekly, or monthly basis just remember that the more specific and detailed it is the better picutre you will get of your situatio. Your budget can be done in excel (follow the link to Budget templated under cool tools) or with pencil and paper. The sooner you start the better.

Figuring out your Income:


How to convert your income to a monthly figure:

If you are paid:

• Weekly, multiply your net pay (take home pay after deductions and taxes) by 4.333
• bi-weekly, multiply your net pay by 26 then divide by 12
• Semi-montly, multiply your net pay by 2

If you receive any bonuses or interest:

• annually, divide by 12
• Semi-annually divide by 6
• quarterly, divide by 3

To Calculate your Monthly Income:

Add up your:

• net salary as calculated above
• Commissions
• Contracts
• Bonuses
• Tax Credit
• Child support/alimony
• Interest income
• Investment income
• Rental income
• Student loan income
• Other income

Where is your Money Going?

What are your Expenses?

• Fixed Expenses: The bills you have to pay and that are usually the same month to month or year to year. These include rent and mortgage payments, insurance, fees for education, car payments, personal loans and credit cards, taxes for the self-employed and savings.
• Variable Expenses: The amounts that very from month to month and that you have some control over. They include food, utilities, transportation, telephone, memberships and subscriptions, vacations, household supplies, gifts and contributions, personal care and recreations and miscellaneous expenses.

**** Record Keeping: Keep well maintained files that you can pull out and look at on a regular basis such as cancelled cheques, credit card and bank statements, ATM and bank receipts.

To Calculate your Monthly Expenses:

Add up your:

• Fixed expenses
• Monthly Savings and loan expenses
• Irregular expenses like taxes and utilities
• Variable expenses

Create your plan:

Now that you know your income and expenses put together a spending plan.

• Make a note of your variable and fixed expenses. When they are added together they should be less than or equalt to your income.
• If you have too many expenses, think about which ones you can reduce without drastically changing your lifestyle. Fixed expenses are usually not adjustable; therefore, you should focus on your variable expenses.
• Be sure to include an emergency fund. Try to build a 3 to 6 month cushion to prepare for the unexpected.
• Once you have a good estimate of your expenses, subtract them from your income to get the number that represents the money you have for savings and reaching your goals.
• If your expenses are greater than your income, you need to find a way to reduce expenses so that you can have some money for your savings.

Once again it is extremelly important to keep good and organized records and to look at your budget on a regular basis and make any necessary changes.

Follow this link to get printable worksheets on page 12 to 14 to start working on your budget now.