Since the start of the New Year, I'm sure I'm not the only one revisiting and revising my budget for 2014.
Do you already have an annual budget? Is it time to revise it? Are you starting your first budget? Let's go through budget making steps and tips one day at a time over the next week or two, and see if we can help each other out.
Step 1: Figure out your take-home pay (both yours and your spouse's if you one), after taxes and all deductions. Write this number down. You're going to need it.
Tuesday 21 January 2014
Thursday 24 October 2013
Know Your Numbers: Debt
NOTE: This post is part of the Know Your Numbers Series, talking about how to find out and keep handy all your financial numbers. Before you can make smart choices about your finances, you have to know what you have, what you owe, and how you usually spend your money.
It's not always comfortable to know you owe money to other people, so it can be easy to stick your head in the sand and avoid it. But it's important to know how much you owe, to whom you owe it, and what it's costing you. Today is the day you stop being an ostrich!
Look up all the people and places you owe money, and write it all down in one spot. Include the interest rate for each one. Consider the following sources:
Knowing how much you owe will help you get a full picture of your financial health. Knowing how much interest you are paying on each will help you see the true cost of what you buy on credit. these debts may not all be "bad" debt, or consumer debt. A mortgage, for example, is a very reasonable type of debt to carry. And car payments may make a lot of sense too, as long as you're aware of the full cost of the vehicle after you include the interest over time. But it is still critical to know these numbers in order to understand your finances.
It's not always comfortable to know you owe money to other people, so it can be easy to stick your head in the sand and avoid it. But it's important to know how much you owe, to whom you owe it, and what it's costing you. Today is the day you stop being an ostrich!
Look up all the people and places you owe money, and write it all down in one spot. Include the interest rate for each one. Consider the following sources:
- Mortgage
- Student loans
- Credit card debt -- MasterCard, Visa, Amex, etc
- Store credit cards or payment plans (Leons, the Brick, Sears, etc)
- Car payments
- Money owed to family or friends
- If you're more than a month behind on any of your utility bills or rent, include that too.
Knowing how much you owe will help you get a full picture of your financial health. Knowing how much interest you are paying on each will help you see the true cost of what you buy on credit. these debts may not all be "bad" debt, or consumer debt. A mortgage, for example, is a very reasonable type of debt to carry. And car payments may make a lot of sense too, as long as you're aware of the full cost of the vehicle after you include the interest over time. But it is still critical to know these numbers in order to understand your finances.
Friday 5 July 2013
Know Your Numbers: Income
NOTE: This post is part of the Know Your Numbers Series, talking about how to find out and keep handy all your financial numbers. Before you can make smart choices about your finances, you have to know what you have, what you owe, and how you usually spend your money.
Net employment income.
This is how much money you bring home each pay period AFTER all deductions (income tax, CPP, EI, benefits, pension deductions, etc.)
If your pay is variable, based on number of hours worked, try to figure out what your average is, or what your minimum amount usually is, and use that to budget.
CPP and EI benefits have a maximum that you contribute in a year, and once you're reached that maximum, your pay cheques will be larger since you won't have that deduction. It's best to calculate your bi-weekly or monthly income based on the months in which you have those deductions ... then when it goes away, you end up with a little extra in your bank account, which will either cover leaks in your spending budget, or allow you to put a little more money into savings. You don't want to get used to spending that extra money on needs each month, because next January it will start being deducted again for the new year. You can see the numbers for maximum CPP and EI contributions for 2013 here.
Benefits.
These include:
Child support or spousal support payments should also be considered in your income. If they are reliably paid, make them a part of your monthly budget. If the payment is unreliable, then it's probably best to build your own monthly budget without relying on this income ... but you should still know exactly what SHOULD be coming your way, and keep track of how much is paid and how much is owing at any given time.
Other income.
Any other money you usually have coming in each month. This could include money from odd jobs, casual babysitting, blog ad revenue, rental property income, and other sources.
To know how much you can spend, you have to know how much money you make. It's time to look up and write down the following sources of income:
This is how much money you bring home each pay period AFTER all deductions (income tax, CPP, EI, benefits, pension deductions, etc.)
If your pay is variable, based on number of hours worked, try to figure out what your average is, or what your minimum amount usually is, and use that to budget.
CPP and EI benefits have a maximum that you contribute in a year, and once you're reached that maximum, your pay cheques will be larger since you won't have that deduction. It's best to calculate your bi-weekly or monthly income based on the months in which you have those deductions ... then when it goes away, you end up with a little extra in your bank account, which will either cover leaks in your spending budget, or allow you to put a little more money into savings. You don't want to get used to spending that extra money on needs each month, because next January it will start being deducted again for the new year. You can see the numbers for maximum CPP and EI contributions for 2013 here.
Benefits.
These include:
- Parental leave top-up
- EI (for unemployment or parental leave)
- Disability payments
- Universal Child Care Benefit
Child support or spousal support payments should also be considered in your income. If they are reliably paid, make them a part of your monthly budget. If the payment is unreliable, then it's probably best to build your own monthly budget without relying on this income ... but you should still know exactly what SHOULD be coming your way, and keep track of how much is paid and how much is owing at any given time.
Other income.
Any other money you usually have coming in each month. This could include money from odd jobs, casual babysitting, blog ad revenue, rental property income, and other sources.
Wednesday 3 July 2013
Know Your Numbers: Monthly fixed costs
NOTE: This post is part of the Know Your Numbers Series, talking about how to find out and keep handy all your financial numbers. Before you can make smart choices about your finances, you have to know what you have, what you owe, and how you usually spend your money.
It's time to collect the info on all of your regular monthly expenses. Many of these fixed costs will be truly fixed, and stay the same each month, while some may fluctuate throughout the year if you're not on an equal billing plan. Here are the numbers you should hunt down:
Cable
Internet
Home Phone
Cell Phone
Hydro (Electricity)
Water
Natural Gas (if you have gas heat or appliances)
Oil (if oil heated home)
Car insurance
Home insurance
Other insurance
Daycare
Some of these bills (such as the water bill) might come every two months, so keep that in mind when you're hunting down the paperwork. If the expense is one that stays the same every month, like Internet usually does, then you'll only need to track down your most recent bill. For services such as natural gas, if you're not on an equal billing plan, you'll want to hunt down as many of the bills as you can (preferably a whole year's worth) so that you can figure out what your monthly average amount is, for when you use your numbers to build your budget.
The other big numbers for your monthly expenses that you should know, include:
Mortgage payments
Property tax (which might be part of your mortgage payment)
Rent
Car payments
While mortgage and car payments also belong in the debt part of knowing your numbers, they are generally an expense incurred every month, so they can equally be categorized with your monthly bills.
It's time to collect the info on all of your regular monthly expenses. Many of these fixed costs will be truly fixed, and stay the same each month, while some may fluctuate throughout the year if you're not on an equal billing plan. Here are the numbers you should hunt down:
Cable
Internet
Home Phone
Cell Phone
Hydro (Electricity)
Water
Natural Gas (if you have gas heat or appliances)
Oil (if oil heated home)
Car insurance
Home insurance
Other insurance
Daycare
Some of these bills (such as the water bill) might come every two months, so keep that in mind when you're hunting down the paperwork. If the expense is one that stays the same every month, like Internet usually does, then you'll only need to track down your most recent bill. For services such as natural gas, if you're not on an equal billing plan, you'll want to hunt down as many of the bills as you can (preferably a whole year's worth) so that you can figure out what your monthly average amount is, for when you use your numbers to build your budget.
The other big numbers for your monthly expenses that you should know, include:
Mortgage payments
Property tax (which might be part of your mortgage payment)
Rent
Car payments
While mortgage and car payments also belong in the debt part of knowing your numbers, they are generally an expense incurred every month, so they can equally be categorized with your monthly bills.
Know your Numbers: Keep your receipts
NOTE: This post is part of the Know Your Numbers Series, talking about how to find out and keep handy all your financial numbers. Before you can make smart choices about your finances, you have to know what you have, what you owe, and how you usually spend your money.
I'm going to skip ahead to tracking your variable expenses. It's a good idea to start there, because you're going to need at least one month of data before you can start to look at where your money goes.
If you don't already keep track of your monthly spending, now is the time to start! I'm sure you'll find some unexpected info about how you spend your money .. both areas where you spend less than you think you do, and areas where you spend more.
It's not hard to do. Just grab a Ziploc bag or a large envelope and label it "receipts". This month, for every penny you spend, keep the receipt and throw it in the bag when you get home (or be like me and empty out your wallet when it's bursting at the seams). If you take cash out of the bank machine, keep the bank machine receipt.
If you want to group the expenses and add them up as you go, that's a fine idea. You can write it in a notebook, put it in a spreadsheet, or an online tool such as mint.com. But if you don't have time for that, or you're not ready for it, don't sweat it, you can deal with the information at the end of the month after you've collected it all. (We'll be talking about ideas to record your spending later).
If you can get your spouse or partner on board, excellent. It's important to have info about your whole household's spending. But if they're not on board or you're not ready to get them involved, start out with just your own expenses for the first month.
I'm going to skip ahead to tracking your variable expenses. It's a good idea to start there, because you're going to need at least one month of data before you can start to look at where your money goes.
If you don't already keep track of your monthly spending, now is the time to start! I'm sure you'll find some unexpected info about how you spend your money .. both areas where you spend less than you think you do, and areas where you spend more.
It's not hard to do. Just grab a Ziploc bag or a large envelope and label it "receipts". This month, for every penny you spend, keep the receipt and throw it in the bag when you get home (or be like me and empty out your wallet when it's bursting at the seams). If you take cash out of the bank machine, keep the bank machine receipt.
If you want to group the expenses and add them up as you go, that's a fine idea. You can write it in a notebook, put it in a spreadsheet, or an online tool such as mint.com. But if you don't have time for that, or you're not ready for it, don't sweat it, you can deal with the information at the end of the month after you've collected it all. (We'll be talking about ideas to record your spending later).
If you can get your spouse or partner on board, excellent. It's important to have info about your whole household's spending. But if they're not on board or you're not ready to get them involved, start out with just your own expenses for the first month.
 |
| My Ziploc of June receipts, waiting to be added up and put into my spreadsheet. |
Tuesday 2 July 2013
Know Your Numbers
The key to being financially savvy starts with : KNOW YOUR NUMBERS
It's impossible to make smart financial decisions, or to make changes to your spending and saving habits if you don't have a good idea of what your various financial numbers are.
I brief, here are the things you should know:
- How much money you make each month / bi-weekly. Include earned income, government benefits, and any support payments if you receive them.
- Fixed expenses. Costs that don't change each month, including your mortgage, insurance, car payments, utilities.
- Variable expenses. How much you spend each month on groceries, entertainment, clothes, gas, and "stuff".
- Debt. Money owed to anyone. Including mortgage, student loans, car loans, credit card balance, line of credit, and anything you've borrowed from family or friends. You should also know the interest rate for each of these things.
- Savings. The total for each of your type of savings, including your bank account, retirement savings, RESP savings for the kids, and any investments.
Sunday 30 June 2013
The Debt Free Challenge
In today's environment of consumerism coupled with the recent economic downturn, more and more families and individuals are finding it difficult to stretch their dollars to meet their needs and wants, let alone save for a rainy day. And it can seem that no matter how much or how little money you have, there is always a new expense on the horizon. It's not easy to conquer debt, whether paying it off or staying out of it altogether. But taking on the challenge of living debt free will pay huge dividends to you and your family in terms of financial security and its accompanying perks.
The intent of this blog is to give ideas and inspiration for you to work on improving your family's financial situation ... whether your goal is to get yourself out of debt, avoid getting into debt, or just find more money for the luxuries of life, we can all benefit from supporting each other. Together, let’s take the challenge of living our lives debt-free!
The intent of this blog is to give ideas and inspiration for you to work on improving your family's financial situation ... whether your goal is to get yourself out of debt, avoid getting into debt, or just find more money for the luxuries of life, we can all benefit from supporting each other. Together, let’s take the challenge of living our lives debt-free!
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