Budgeting

Do you find yourself out of money by the time pay day rolls around?  Are you ever left wondering where all your money goes?

Budgeting has a bad reputation.  Associated with penny-pinching, and “going without”, budgeting is often considered a necessary evil for those who find it hard to make ends meet. But budgeting is important regardless of how much or how little we earn. 

Budgeting is a simple process.

1.      Detail your current income and expenses

2.      Review your income and expenses in light of your financial goals

3.      Complete a new budget

4.      Review your account structure

Current income and expenses

In your workbook you will find a financial review sheet.  Filling this in will help you to identify where all your money goes every month.  It will also highlight your main areas of expense.

Review your situation and create a new budget

Bearing in mind your financial goals, you may like to reassess the following:

·         Income – in what ways can you increase your income? 

·         Expenses – are there any variable or discretionary expenses that you can reduce?

Then fill in the second copy of the financial review sheet with your proposed new budget.

Review your account structure

One of the most effective budgeting techniques is to capture all of your income and allocate it on a regular basis into predetermined accounts.  You can structure accounts so that you cannot raid one account to pay for expenses that should come from another account.  The more disciplined you are, the fewer accounts you need.

In order to make the most of your income, don’t leave money sitting in non income earning accounts.  You may like to consider one or more of the following:

•  revolving credit facilities (best for people with fluctuating incomes and larger surpluses);
•  high yield savings accounts (move money into your cheque account only when you need to pay bills);
•  a high interest earning cheque account facility (some accounts have no entry or exit fees and 
•  earn you an interest rate similar to, or higher than, a savings account rate).