Dec 14, 2015
Holiday spending got you worried? You might need a budget.
If you’re like most Canadians, you may be spending more on the holidays this year. A recent CIBC poll showed that we expect to on holiday shopping this year. That’s on top of our regular monthly expenses. If you’re thinking, “I’ll just put it on my credit card and worry about it later” or the word “budget” has you nervous, read on.
First, let’s look at why you should track your spending
Sure, $4 for a coffee on your way to work, $10 for take out at lunch out or $25 for dinner may not seem like much at the time, but add them up over the course of a month and you’re talking hundreds of dollars. And if you find yourself scratching your head, wondering where your money goes by the time the month ends, it might be time to create a budget.
Second, figure out how much you spend
Let’s look at your expenses for the last 30 days and categorize them into Fixed or Variable. Fixed expenses include your rent or mortgage payment, any insurance premiums (like home or auto), car payments and automatic savings contributions like RSPs. Variable expenses include utility bills like cable or satellite TV, internet, mobile phone, or hydro, gas or transit costs, weekly groceries, monthly credit card payments, and entertainment expenses like dinners out with your crew.
Third, track all income sources
Now let’s look at how much income you receive – from employment, income from investments or rental properties, gifts and other sources. Does Grandma still send you a cheque for $10 on your birthday? Track it. Expecting a bonus this year at work? Track it. You get the idea.
Fourth, look for anything you can live without
Once you have all costs and income tracked, you’ll have a good sense of your financial fitness. If your costs outweigh your income, look at areas where you can cut back. Bring your coffee to work instead of picking one up on the way, pack your lunch instead of grabbing some take out. That’s not to say you can’t from time to time, you can – time to time being the operative phrase.
Lastly, create your budget
If you need help keeping track of your budget, out there, each with their pros and cons. Personally, I like . It connects all your financial accounts, lets you assign budgets with relative ease, provides a good financial overview and tracks your financial trends. It does have a few quirks (like unspecified costs that have to be sorted manually), but for the most part it’s automatic. It might seem tedious, but it’s worth it. Your wallet will thank you.
Pierre Dupuis is a guest contributor and spends his spare time collecting Wonder Woman paraphernalia and painting.
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