February 18th 2016 - Betty Anne Flynn
My previous Blog was all about setting goals. Now that you’ve done that, it’s time to put a plan in place. You will need to review your finances so that a budget can be created. Now don’t cringe at the word “budget”. Remember your goal and focus on that goal.
The first thing you need to do is determine how much money you have left over each month to set aside for your goal. This is done in 3 stages and you don’t need any fancy budget program. I recommend that you use a spreadsheet program like Excel, or good old fashion paper and pencil (with a good eraser!).
Add up your income from all sources. This is your “net” income, or after tax income. For most people, this will be the amount of pay you receive on pay day. Other sources of income may include Child Tax Benefits, employment expenses reimbursements and support payments.
List all of your monthly expenses:
Start with your fixed expenses, which are generally your housing cost, utilities, phone, cable, internet, loan payments and insurance. These expenses are typically the same each month.
Then add in your variable expenses. These expenses can range in price from month to month and include groceries, transportation and entertainment.
Next, determine your sporadic expenses such as clothing, gifts, vacation, car repair and house maintenance.
Include ALL expenses you incur. Look through your banking statements for the last 6 – 12 months to ensure that you don’t miss anything. It’s easy to miss miscellaneous items like dry cleaning, salon, licence renewals, subscriptions, hobbies and club memberships. The more accurate you are with listing your expenses, the more accurate your budget will be.
When you have finished steps 1 and 2, the next step is to subtract your expenses from your income to determine how much you can save each month.
If you are satisfied with the outcome of Step 3, talk to us and we’ll help you with a savings plan to reach your goal. We’ll calculate how long it will take to reach that goal and provide advice on what account best suits your needs.
If you arrive at a deficit in Step 3, don’t fret! In our next Blog, we are going to provide helpful hints on eliminating and reducing expenses in an effort to get you on the right track. You’ve taken a huge step by setting goals and looking at your financial picture. Congratulations! You’ve started your path to Financial Wellness!
Written by Betty Anne Flynn