Six Simple Tips For Creating A Monthly Budget
Creating a budget is the first step toward organizing your finances and keeping track of where you spend your money. With a budget, you can quickly achieve your savings goals over time, prepare for emergencies, and encourage smart spending.
However, budgeting may seem like a daunting task, but it’s not that difficult to create one. All you need to do is make minor tweaks to your spending habits and keep track of your finances.
Below, Mortgages By Erin has put together a list offering a few tips on how you can create a simple yet effective monthly budget.
1. Calculate your income
The first step to establishing any budget is determining your income and knowing exactly how much money you bring in each month after taxes. This is important to understand how much you have available to spend.
2. Track your spending
Review and categorize all of your monthly bills. This can help you track where your money goes, your priorities, and where changes can be made.
Start by listing your fixed expenses or costs that do not change on a monthly basis, i.e., car loan payments, rent or mortgage payments, etc.
Next, you’ll want to consider your variable expenses, such as groceries, gas, entertainment, etc., and determine your average spending. This is typically the area in which people are able to cut back.
3. Set realistic goals
Realistic goals are vital for long-lasting financial health. It’s important to determine what you cannot live without and where you can scale back or cut down on spending.
When it comes to a monthly budget, consider the 50/30/20 rule:
- 50% of your spending is for NEEDS (rent/mortgage payments, car payments, utilities, and groceries)
- 30% of your income is allocated to WANTS (shopping, vacations, streaming services, etc.)
- 20% of your income towards SAVINGS or DEBT Reduction (emergency funds, retirement, child’s education, credit card payments, etc.)
4. Make a plan
Once your goals are set, you can make a plan to ensure a healthy cash flow each month.
There are a few different ways you can plan to handle your monthly budget. For some, setting realistic spending limits for each category works well. For others, taking a look at the importance of the items on their expenses list and re-prioritizing can free up funds.
5. Adjust your spending
After determining how much money you bring in each month and what you spend it on, consider adjusting your spending to stay on budget.
It’s also a great time to review your fixed expenses. Perhaps you can save money by remortgaging your home for a lower interest rate or longer amortization period. Be sure to reach out to me at Mortgages By Erin if you’re interested in exploring these options!
6. Stay on Track
Once you’ve tracked all your spending and income and determined your monthly budget, you will want to stay on track. Tracking your budget on a monthly basis is important to catch any changes in your spending habits. It is also a good idea to conduct an annual review and take into account any increase in expenses or wages that may require shifts in your overall plan.
Remember! A healthy, well-thought-out budget is key to financial freedom and comfort.
If you’re looking for more financial advice, reach out to Mortgages By Erin. I have over ten years of experience, and my team and I have successfully helped hundreds of people realize their dream of homeownership. With the customer always in mind, I have successfully and reliably assisted our clients with the sometimes daunting task of obtaining mortgage financing by offering our advice and support and sharing our wealth of knowledge.
My services are extended to clients across Ontario, including the following areas: North York, Scarborough, Etobicoke, Toronto, Mississauga, Markham, Vaughan, and Richmond Hill, ON.
Get in touch with me today!
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(647) 885-6940 or email me at erin@mortgagesbyerin.ca.