Do you have the appropriate funds to go on vacation this summer? Enough money saved for a tour of Europe, or maybe some beachcombing in Bora Bora? First, determine whether the goal is within your means or not. If you don’t think so, or do not know… take the time to find out. Make a BUDGET!
Put simply, a budget is a document (paper or electronic) that helps you manage your personal finances in a visual and effective manner. It’s also a great tool that allows you to achieve certain stretch goals like going on that dream vacation without getting out the plastic!
Key reasons for making a budget
Why do people make a budget? Here are some great reasons:
- You want to control your expenses.
- You are too tight on money.
- You want to be more confident in your financial wellness.
- You are no longer able to repay your existing debts.
- You do not save money on a regular basis (for example, automatic withdrawals from each payroll deposit to contribute towards an RRSP).
- You would like to save for a more blue-sky goal, such as a dream vacation with your family!
Where to start a budget?
For each day over a period of at least one month (ideally two), list all your expenses. A coffee for $2, $45 for gas, $134 for groceries, and so on. View your account statements to be precise, and how much you’ve spent in cash on beers with the boys, restaurants, etc. These expenses often go unnoticed!
Remember that when making a budget be sure to include all your annual expenses - insurance, registrations, car payments and monthly expenses like internet connections, cell phones and even electricity. This way, you can paint a full and complete picture of all your expenses.
Next, enter your expenses and earnings in two separate columns of a table (examples here) to compare what money is coming in on a regular basis and what is going out. Do not forget to add the expenses of your dream trip in the list as well - including air tickets, accommodation, restaurants, destination activities, souvenirs, etc.
We suggest you download various budgeting applications on your smartphone to try them out and see which one is right for you. And through diligence and good planning, before you know it friends and family will be wishing you “Safe Travels” and a “Bon Voyage” as you embark on your summer vacation.
- Whether you have full control or no control over your finances, everyone (regardless of their financial wellness) can benefit from a realistic family budget.
- Establishing a budget begins with the exact and precise calculation of each monthly expenditure. No exceptions.
- An Excel spreadsheet or budgeting application can easily help you keep track of your monthly and yearly finances.