Financial stress has recently been exacerbated by inflation rates and fuel prices. In fact, this year, Canada has experienced the highest cost-of-living increase in decades, and these price hikes have become a burden for many. One way to adapt to escalating expenses is by developing and maintaining a budget.
Benefits of a Budget
A budget is a spending plan that outlines money earned, spent and saved. Creating a budget can help ensure you are able to pay for all your monthly necessities while also reaching your financial goals. Utilizing a budget can help you:
- Determine spending limits.
- Manage and pay off debts.
- Reduce spending and save more.
- Relieve financial stress.
- Be in control of your money.
- Learn about your buying habits and what is truly important to spend money on.
Creating a Budget
Once you’ve decided to implement a budget, it’s time to create one that works for you. Consider the following steps to create a budget:
- List your income, savings and monthly expenses. This will determine how much money you have left after paying for your necessities. It may also help to reflect on previous months to see where you have a habit of overspending.
- Review and set spending limits for each category. Categories may include housing, food, insurance and any mandatory monthly bills. Determine how much can be spent in each area.
- Keep it up to date. Every time you spend or earn money, no matter how small the amount, make sure it is accounted for in your budget.
Maintaining a Budget
The most difficult steps of implementing a new habit are starting it and making it part of your routine. Follow these tips to help maintain your budget:
- Save receipts and bills.
- Update your budget whenever a bill or expense, like fuel, increases.
- Evaluate your budget weekly to determine how well you are sticking to it and whether more can be spent or saved the following week.
- Include an emergency fund in your budget. This will help make unexpected expenses, such as a car repair, more manageable.
- Prioritize paying off debts.
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