As the 2019 holiday season approaches, Canadians are predicted to spend an average of $1,593 on their holiday spending. And that’s on top of regular monthly expenses. If you often find yourself putting things on your credit card to worry about later, or if the word “budget” has you nervous, read on.
The first step to budgeting is always the hardest and most eye-opening. Sure, $4 for a coffee on your way to work, $10 for take-out at lunch, or $25 for a dinner out with friends may not seem like much at the time, but add them up over the course of a month and you’re potentially talking hundreds of dollars. 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. Figuring out how much you spend each month can be a bit nerve-wracking at first, but it’s worth it in the long run.
Let’s look at your expenses for the last 30 days and categorize them into Fixed or Variable.
Fixed expenses are any amounts that are consistent, or the same amount each, month. These can include:
Variable expenses are expenses that can change in amount each month. These can include:
Now let’s look at how much income you receive – from employment, income from investments or rental properties, gifts, or your side hustle. Does your family 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. As a rule of thumb, it’s always a good idea to err on the conservative side if you’re not sure exactly how much extra income you’ll be getting. For example, if you get a bonus based on performance that can range from 3-5% of your annual income, budget as if you would only be receiving the 3% amount. You can always readjust later if you end up earning more.
Once you have all costs and income tracked, you’ll have a good sense of your financial well-being. 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 and pack your lunch instead of grabbing take out. Little changes like these can have a huge impact. That’s not to say you can't treat yourself from time to time, you absolutely can! Time to time being the operative phrase here.
If you need help keeping track of your budget, there are a few apps out there, each with their pros and cons. Personally, I like Mint. 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. Another great resource I use for budgeting, is this budget calculator which is featured on the Government of Canada website. It's basic but informative and can be downloaded as an Excel file so that you can revisit it at any time, play around with the numbers, and see what percentage of your income goes towards each item on your budget. It might seem tedious, but it’s worth it. Your wallet will thank you.
Take control of your budget with a KOHO smart spending account to help you save even more during the holiday season. This no-fee account comes with a prepaid Visa card that earns cash back on every purchase. The KOHO integrated app also helps you to spend smarter and save more while giving you insights into your spending and real-time balance updates after every transaction. To top it all off, you’re able to choose from a selection of colorful cards, so that your KOHO banking experience is completely unique to you! You can use the code BORROWELL and receive an extra 1% cashback for 90 days when new users use this code on sign-up.
Maybe you need to consolidate some holiday-related debts, or a little extra cash for purchasing an extra-special gift for that extra-special someone. Whatever the reason is, Borrowell personal loans start at 5.99% APR and range from $1,000-$35,000. Check your free credit score with Borrowell to see what you could qualify for.
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