Budgeting—Money Made Simple
/ Author: CLAC Staff
/ Categories: Guide magazine /
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Budgeting—Money Made Simple

While most people consider budgeting intimidating or tedious—because it can be—it’s important to focus on the amazing benefits that a good budget can deliver.

Budgets. Spending plans. Regardless of what you call it, everybody needs to know how much money comes in each month, how much goes out, and where it goes. Did you know the average person cannot account for 15 to 20 percent of their net monthly income?

3 Benefits That Budgets Deliver

  • Prepare for those uh-oh and must-have moments in life.
  • Learn where and how much you spend.
  • Worry less about things such as debt and retirement.

8 Tips for Building a Budget That Works

1. Have one. Simply guessing what your expenses are and hoping you spend less than you earn seldom works in the long run. A budget will help you understand your spending better and will help keep you accountable.

2. Use real numbers. Track your income and spending for a couple of months or go through bank statements to get a good handle on exact­ly how much money comes in each month and where it goes. Don’t forget irregular expenses such as car and home repairs.

3. Separate needs versus wants. Split all your spending into two main categories. The first is for things like your rent or mortgage, transportation to get to and from work, basic groceries, savings, and utilities. The second category is for things that are more flexible, such as entertainment, clothing, and dining out.

4. Trade some of today for more tomorrow. Choose to spend less today so you’re able to spend more to­morrow, especially if you’re carrying very expensive debt such as credit cards. Adjust your spending, and pay off your most expensive debts as quickly as possible.

5. Make sure it’s realistic. When deciding on areas that you can cut or how much you can put toward saving, make sure the numbers are realistic and sustainable in the long run.

6. Make regular adjustments. Regularly monitor your progress to ensure your target bud­get is on track. You can increase in one area by decreasing in another, but always make sure you’re spending less than you earn.

7. Be true to yourself. Lying to yourself is like lying to your doctor—you may end up with the wrong prescription. If adjusting spending isn’t enough to balance your budget, you may need to make bigger decisions such as moving to a more affordable living space or taking stronger actions to reduce your debt.

8. Focus on long term gain. Seeing the positive results of an effective budget is reward­ing and should help motivate you to stay with it.

To learn more about budgeting and for other financial advice, visit iAcquaint today. iAcquaint is a digital financial wellness service offered to you at no cost. You’ll have access to videos with budgeting tips, budgeting calculators, spending worksheets, and more. Access iAcquaint through the My Health & Wellness section on myCLAC.ca.

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