How to Build a Household Budget
Money management is a skill that many of us learn when we become adults.
Understanding how to live within your means and how to save money can stop you getting into debt, but it can also help to get you out of it.
It’s never too late to learn to manage your money, and the steps you take now could help make a significant difference to your financial future.
Building a budget is just one of the ways you can take control of your money and turn things around, helping to improve your financial situation.
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Habits of financially savvy people
People who are good with money tend to exhibit the same kinds of behaviors.
Some of these include:
- Making sure basic living expenses are paid;
- Keeping debts manageable;
- Putting money aside for vacations, rainy days, etc;
- Avoiding stress caused by money problems.
Being financially savvy doesn’t have to mean having a lot of money – it’s what you do with it that matters.
Making the most of what you’ve got is the key, and will allow you to adjust even when your circumstances change.
How are your money management skills?
When it comes to managing your money, how many of the following apply to you?
- Do you monitor your daily, weekly and monthly spending?
- Are you prone to impulse purchases and spending money on things you regret later on?
- Are you actively taking steps to manage your money?
Consider your answers carefully.
If you’re honest with yourself, is there more you could be doing to improve your finances?
Creating a budget is one of the simplest and most effective ways of developing money management skills.
A budget doesn’t have to be a negative thing; it’s simply a way of managing your money so that you can spend your income accordingly and help you plan for the future too.
7 steps to build a household budget
Building a household budget is easier than you think.
You can start at any time and make adjustments when your income changes.
Get started today with the following steps:
1. Set goals
Setting money goals can give you a focus to your budgeting and help you stay on track.
From wanting to get out of debt to saving to buy a house, there are different goals you can set yourself.
Think about both the short-term and the long-term – it’s easier to achieve your goals when you break them down into more manageable chunks.
2. Take a long, hard look at your money
Do you know where your money goes each month?
It’s time to look at your statements and transactions and work out what your income is, what your expenses are, and where the rest of your money goes.
You could be left very surprised at what you spend each month,
Your monthly spending can be split into two categories: the things you want and the things you need.
Your needs have to be covered by your income, whereas the wants are things you could live without.
You might need to make some tough decisions to cut out some of your wants to be able to meet the goals you’ve set out.
4. Create your budget
Now that you’ve got a clear idea of where your money needs to go, you can create your budget.
Make sure it covers everything you need, as well as what you need to reach your goals.
It might be easier to use a spreadsheet to help you keep track.
5. Start using it
Once your paycheque comes in, start allocating money according to what you’ve agreed.
Paying everything upfront will mean that your expenses are all covered, forcing you to stick to what’s left.
Think about the weeks ahead and what you’ll need money for to help you plan week to week.
6. Plan ahead
There are events that happen throughout the year that can put a strain on your finances.
Plan ahead for birthdays, weddings, vacations, Christmas and others to make sure you can afford them without resorting to credit.
7. Give yourself time
Budgeting is difficult.
It takes time to adjust, especially if you’ve never tracked your spending before.
After a couple of months, you’ll settle into a routine and budgeting will become second nature.
Setting a household budget can help you improve your finances in many ways.
It can help you get out of debt, while also making sure you’ve got money to spend on the things that you love.
If you’re struggling with debt, get in touch today.
We can talk through your options for debt relief in Canada and help you get back on your feet.
Call us today, and we’ll be more than happy to help you find a solution to your debt problems.
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