Wondering how to budget? It’s easier than you think with our free tool. The first step to making a budget is determining how much money you have to spend in an average month. This would be your net income, or what you earn after taxes. Next, you need to figure out how much you spend on various items each month — including paying back your current debts — and then see how this measures up against your net income. (Read more in our blog How Much Money You Should Spend on Monthly Expenses.)
Putting your income, expenses, and debt down in writing will help you manage your money and track your spending behaviour, so you’ll be in a better position to fulfill your financial goals. It’s recommended that you try to save 10-15% of your net income. If you're unemployed, try to save 2-3% of any income you receive.
We’ve created a simple budget template in the first tab of our Budget Planner + Expense Tracker tool, which you can download by clicking on the link below. Your net income should be fairly easy to list; only include regular sources of income that you expect to receive over time. Listing your expenses and spending, however, will require a little more work which we’ll get to next.
Like most people, you may not know where all your money goes after covering obvious living expenses, like your rent or mortgage, car payments, utilities, etc. This is why you should track your monthly and daily expenses when you first start putting together a personal budget, including even small purchases like coffee, snacks, gum, etc. After all, these seemingly inconsequential expenses can quickly add up!
You should track your spending for at least a month (ideally 2-3 months) every day at home, at work, and at play. This will help you create a detailed spending plan you can follow in the months ahead. On tabs 2-6 of the Budget Planner + Expense Tracker (or week 1-5), you’ll start to plug in all your different expenses when you spend your money. As you track your spending week to week, the tool will automatically be comparing your spending to your planned budget in tab one. You’ll find this summary detailed on the Final Monthly Report tab.
Next, you'll then need to write down your short, medium, and long-term financial goals based on your needs, wants, and dreams in life. Short-term goals might include saving up for a new cell phone or a vacation; medium-term goals might include saving up for a car or a down payment on a home; long-term goals can include saving for your retirement or your child’s education. Of course, you need to be realistic about what you want, need, and can achieve based on your current income. If you set unachievable goals, you’re setting yourself up for failure and further frustration.
By understanding your spending habits, your money-saving goals, and what you can expect to have left over, this will seem like less of a challenge and you’ll be able to be reasonable with your goals. Just keep in mind that circumstances and goals in life can change, for better or for worse, so you should be prepared to re-evaluate and revise your budget every so often.
Read More: How To Create SMART Financial Goals
The most important skill for financial health is the ability to budget. Get expert advice on how to budget and why it’s important to budget from a group of experts including credit counsellors, account administrators, and educators in this video testimonial.
Now, it’s time to take control of your financial goals and future! Our Money Management and Budgeting Guide has valuable information and tips that can set you up for success.
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If you’ve tried budgeting before without success, and our free tools have you scratching your head, don’t hesitate to contact us for free and confidential advice.
