Budgeting IS Cool!

Well, I thank you for sticking around to read how budgeting is cool.  I’m pretty sure I lost a few of you guys on that title but it really is, cool I mean, to budget.  Sexy even.  Yes, I went that far.

Ok, if I haven’t lost you yet on my enthusiasm for budgeting, then let’s get to it.

monthly-budget.jpg

image courtesy of canadaloansearch.com

 

First, with a solid plan in place to allocate your income, budgeting allows you to see where your excess funds are.  By knowing what money you have left after all your bills and expenses are paid, you have a better understanding of how much money you can put towards debt repayment, increase your RRSP contribution or your TFSA contribution, you can put it towards travel, renovations that you’ve been waiting to have completed, and so on and so forth.

Through budgeting, knowing where your money, let me emphasize that, YOUR money is going, keeps you in control of it and you get a better understanding of what you want to use your money for.

You know how hard you worked for it, the sacrifices you made (long commutes, overtime) so why not budget, take control and know where your dollars are going and hopefully more is going towards the things you want to do versus debt repayment.

Secondly, budgeting is a great way to see where you can cut your costs.  I do a budget every month (as non-fixed expenses change from month to month) to gauge where my income is going.  How much to fixed expenses, how much to variable expenses and how much towards food, transportation, savings and then seeing what is left over.

I write out my budget, yes, I’m old school and like to write it out in a notebook to have quick access to it whenever and to make edits and changes as the days/weeks go on.  That way I can also see month after month the difference in my expenses and leftover from my pay each month.  From doing this, I was able to see how much I was paying for cable when I rarely watched it, if only for the news which I can read/stream online.  So I cut out my cable and saved a bunch which is now going towards my savings.

Now I’m saving more of my money and not giving it away.

Through writing it out, I was also able to see where I was wasting my money.  I had a storage locker off-site for random household things like my Christmas tree and all the decorations that go with it, random pieces of furniture that I wasn’t using.  I decided to sell all those items and get rid of the storage locker.  I don’t miss those items and really, if I’m storing them and not using them, do I really need them?  So why waste money holding on to them.  Again, I am saving money each month which I have put towards my savings again.

By simply evaluating my situation through budgeting, I am able to see that I would rather see my savings grow, keep more of my money, stay in control of where my money goes than give it away.  I want to be addicted to saving and not spending.

Trust me, this is hard for me.  I used to be a huge impulse buyer, finding all sorts of reasons to need that pair of shoes (I don’t have them in blue…hehehe) but when I see the shoes sitting there, collecting dust, I realize they weren’t a good investment.

Thirdly, you should be budgeting for upcoming expenses such as travel, car repairs, renovations, weddings (gifts, outfit, etc).  When you see how much money you have left over after all your fixed and variable expenses are paid, you see how much, on a monthly basis, you are able to put away for a travel say in a year and half.   You have looked at prices for a bathroom renovation in 2018.  It will cost $8,000, divide that amount by the number of months until the you want to have the renovations started.  That will give you a monthly amount that you need to aside to afford the renovations.

Example:
$8,000 bathroom renovation in 16 months.  $8,000 divided by 16 = $500 a month (or $250 twice a month)

That doesn’t sound unreasonable to stash away $250 each paycheque.  Then you are more aware of the cost and are more encouraged to save knowing how much it will be, how long you’ve saved for it.  It makes you appreciate the upcoming renovations that much more and look forward to it with more anticipation because you’ve put time and thought into waiting for it and planning for it.

Plan To Save To Spend

Plan out what it is you want to do (research costs, months that work better for the weather and for work schedules).

Save the budgeted amount each month (or per pay day) to keep you on track of your expenses.

Spend the amount you have been saving and none of it will be on credit, it will be paid in full with no credit card payments afterwards.

What do you guys think now about budgeting?  Sexy right?  Practical?  Makes sense (haha pun intended)  Do you currently use a budget?  Is it written out like me or is it an excel spreadsheet you update as you go?  How have you found budgeting to be; useful?

Don’t think of it as budgeting if the word taste like vinegar, think of it as a ‘spending plan’ as that’s what it is, essentially; planning how you spend your money.

Chat soon!

J.

 

 

 

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