Financial security isn’t always about making a lot of money — it’s about making the most of the money you have. This means being conscious of your fixed and variable expenses, intentional about saving and investing, and committed to staying with the boundaries you’ve set for yourself. It takes some planning and effort, but it’s within your reach.
Here are some tips for creating an effective household budget and sticking with it. For personalized financial guidance, please reach out to an Interior Savings Credit Union branch in your region. We’d be pleased to help.
Understand your income and output
Let’s start with a simple task: writing out the details of your monthly income and expenses. This will help give you a clear picture of your day-to-day finances while offering a logical starting point for your budget.
Either as an individual or with your partner, make note of your total monthly net income. Then, list all of your fixed expenses (rent, mortgage payments, insurance, cell phone bills, etc) as well as your variable expenses (groceries, entertainment, clothing, miscellaneous, etc). Ideally, your total income will exceed your total monthly expenditures (the more so, the better). If this isn’t the case, you will have to either increase your income or decrease your expenses to avoid going into debt. It may feel like a balancing act, but once you’ve nailed down numbers that work, you’ll be able to proceed with confidence.
Understand your goals
Your budget should reflect both your immediate and long-term financial goals. If you’re saving up for a down payment on a house, a home renovation, a child’s education, a family vacation or another significant expense, include these items in your budget. For example, you may want to set up an automatic deposit to a savings account or manually transfer a set amount after each pay cheque. Reaching your goals requires strategy and dedication, but you can make it happen.
Plan for the future
A strong and effective budget will consider not only your monthly expenses, but your needs and goals for the future. Consider including monthly contributions to an RRSP, RESP and/or a TFSA in your monthly budget. You may also want to consider life insurance, critical illness insurance and other policies that help round out your financial plan and protect your family from unforeseen challenges. An advisor from Interior Savings can help identify the right solutions for your needs.
Get expert advice
Creating a monthly budget can be a fairly straightforward task for some individuals, but many others may benefit from the advice of an experienced financial advisor. If you’re not sure whether or not you could use professional guidance, consider erring on the side of caution. Regardless of your age, income or experience in personal finance, it’s smart to get an expert, objective opinion on any major financial undertakings. After all, it’s your future we’re talking about! You’ll be glad you invested in your success and got the peace of mind you deserve.
To speak with an Interior Savings team member, please contact us. Our team is here to help you reach your goals.