For most tracking their monthly expenses means knowing how much they have to put out each month. Usually, this gives them a vague idea. Partly because there are variable to many of the monthly expenses. For example, utility bills will vary each month. There will be options as to how much you need to pay on your credit card bills. You don’t know exactly how much you are going to spend on groceries. One stable amount may be your mortgage as this will be a set rate.
The Little Details Count
A lot of people have come to the realization that they really need to control their finances by having a budget. This can be exciting to do at first but with the fluctuation, in some of the monthly expenses, it can soon become frustrating. Often the driving force behind a budget is seeing that at the end of the month all the expenses have been met and there is a little left over. If the fluctuations are too great then this is not usually what happens. By paying attention to details it can help you to really stay on track with your budget, but it can take you a step further. It can give you some incentives for cost-cutting which can turn into savings.
The Utility Bills
These can be hard to budget for because each month they are different. What you can do is go through all your bills for the year. Now that we are starting a new year this is a great time to do this. Determine what your highest bill was and use this as your budget figure. So for example:
Your biggest hydro bill for the year was $310. For the month. Now use this as your budget figure. This is going to serve two purposes. One is that you will have allotted enough money to pay the bill and many times will have some extra left over. If you get a bill that is over this amount then some red flags should go up. What escalated the bill? Do some research to find out what it was. It could be something wrong with the billing, or something that you can eliminate in your hydro usage.
Do the same with each utility bill.
Your Car Payment and Insurance
These will probably be fixed amounts so they will be easy to list on the budget.
Your credit cards
Your payments on these can fluctuate but be sure to pay more than then minimum. Otherwise, you will only be paying interest. For example.
If your minimum payment on your card is $150. Try to pay 25% more of this which would be $150 + $38 (rounded off) for a total payment of $178.
The Groceries
This can be a tough one but before you budget for it, add all the other expenses to the budget first. The grocery bill is the one you have more control over. You can increase or decrease it according to proper planning. You may not have that option with some of your other expenses.
Just because there is extra money left when it comes to budgeting for the groceries doesn’t mean all these extra dollars have to be spent on this. You really do want to budget for building your savings.
Emergency Fund And Savings
Something else to keep in mind is to budget in emergency savings as well as long term savings. You know your circumstances better than anyone else. Nobody can predict the future when it comes to financial emergencies. But do try and give this some thought. For example, is your furnace getting old and you think that it could konk out in the next year? If so what would be the cost for repair or replacement? This is the amount you want to look to get into your emergency account. Go through this for some other major emergency scenarios and set the costs of these as the goal for your emergency savings. If something else happens to come up that you need to tap into these savings for that’s fine. That’s what it is there for. But, make sure you replenish it for the more likely emergencies that you identified.
Anything that involves your finances deserves your attention. This includes your tax obligations and your tax filings. If this is something you need help with be sure to contact me as I am sure I can be of assistance to you. You may also find my tax planning services to be most beneficial.
