Knowledge is power, and that is particularly true when it comes to your personal finances. If you’re struggling to manage debt or want to save for a large purchase but can’t seem to find the money, the best way to get started is to take stock of your current situation. That’s where a personal budget template comes in.
Creating a personal budget template can help you:
- Pay all your bills every month
- Know where your money is going
- Pay off your debts
- Save for the future — post-secondary education, retirement, etc.
- Plan for major purchases.
If you’ve never kept a personal budget before, you may be surprised at the information you glean once you begin tracking. For example, spending $2.50 per day on coffee could add up to $900 per year. Or you may find that your habit of dinner out twice a week is costing more than buying groceries and cooking at home.
No matter what your financial goals, keeping a personal budget is a great way to help you meet them — but how do you get started?
The best and easiest way is to create a personal budget template that works for you.
Step One: Choose your method.
Are you tech-savvy? Or do you prefer old-fashioned pen and paper? When it comes to creating a personal budget template, it’s all about personal preference. You may want to look into free money-tracking apps that connect to your credit and debit accounts, or you may find writing down on paper easier and the daily act of putting pen to paper can help you remember to make your budgeting a priority. A happy medium can be using a computer program, such as Microsoft Excel, that you can configure to tally expenses and use filtered lists.
Step Two: List your income and expenses.
Are you spending more than you bring in? Take your recent pay stubs, bills, and receipts and begin calculating. If you don’t have these saved, you may want to start tracking every expense for a month and then go from there. You’ll start to see a comprehensive overview of what you’re spending and where.
Step Three: Create budget categories.
When you’ve tracked one month (or more), you can split your expenses into categories: food, shelter, transportation, personal care, and debt repayment are some popular ones. Also, be sure to think through your entire year. Some months have different expenses than others — for example, presents during the holiday season, owing a tax debt in the spring, etc. — and add these categories in.
Step Four: Define needs vs. wants.
What budget categories need to get paid and what are only wants? For example, taking the $2.50 per day latte, if you are spending $900 per year on coffee but are consistently coming up short on your credit card payments, you may define the latte as a want, not a need.
Step Five: Create a balanced budget.
Ask yourself where you’re spending that you could cut back, and define your future financial goals. Do you need to pay down debt or do you want to save for travel? Define how much you want to save and put that into your budget. Once you know how much you can spend per category, put it into practice. Continue tracking your income and expenses and looking at how much you spend each month. If you go over budget in a category, such as dining out, ask if that category is a need or if it’s a want and can be cut back.
Building a personal budget template is one of the most powerful ways to regain control of your finances. A little bit of work upfront can help you save for years to come and lead you towards financial freedom.
If no matter how much you crunch the numbers you can’t seem to make it work, Fuller Landau Debt Solutions can help you explore your options, including credit counselling, debt consolidation, Consumer Proposal, or Bankruptcy. Call us today to schedule a free consultation with one of our experienced and compassionate Licensed Insolvency Trustees: (416) 927-7200.