Time To Create A Budget

time to create a budget

 

Do you have trouble making your money last until the end of the month? Are things a little too tight for comfort? Perhaps its time for a little budgeting lesson.

 

Short term pain, long term gain

Some of these things may not sound fun, but they will lead to saving money which you can then spend on fun things. Let’s start by putting things into perspective. Start by writing down your monthly earnings. Now make a list of all your expenses. Rent, food, coffees, movies, clothes – every single thing you spend money on every month.

 

Must/Want

Now break down all those expenses into two columns things that you absolutely must pay every single month. Rent, hydro, phone bill etc. Everything else goes into the other column.

Add up everything in the must column and subtract that total from your monthly earnings. What ever is left is what you can divvy up for all those other expenses. If you’re running short every month then the wants column is where you have to cut back.

 

Less of the wants

That might mean cutting back on the morning coffees or movies. It might mean you’ll have to settle for last year’s wardrobe a little longer. Once you’ve laid out everything in an easy to understand chart it’s easy to see exactly where you can scale back.

 

Don’t think of it as cutting yourself off from things you love, think of it as finding alternatives. For example, you can still hang out at the bar if that’s what you like to do, but instead of just powering through several beers, have one and just participate in the trivia night.

You could go volunteer somewhere; that’s free and feels lovely. You could go for a bike ride or a hike or a nice walk. Just think outside the box. Or wallet.

 

Make room for saving

One more thing about budgeting. If possible you want to save a little every month as well so if anything unexpected comes up you don’t suddenly find yourself in an emergency situation. If at all possible, include 10% of your income in the must category. Let that build and take care of itself so if you ever need it, it can take care of you.

 

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