A budget can help you plan for expenses and provide insight into your spending habits, making it easier for you to achieve financial goals, such as building an emergency fund, paying down debt or saving for a down payment on a home.
First, make a list of your income and expenses. Determine how much money you have to spend each month and compare it with how much you pay for various bills and items during that same period. In your expenses, be sure to account for paying back any debts. Like many people, you may not know where all your money goes after covering obvious living expenses such as rent or a mortgage, car payments and utilities. It is important to put your income, expenses and debt down in writing to help yourself track your spending behaviour.
Everyone needs a purpose for their personal budget, and if you have unsecured debt, such as loans or outstanding credit card balances, your first priority should be paying it down. If you’re aware of your spending habits, have set your money-saving goals and know how long it will take to pay down any unsecured debts, your short- and long-term financial goals will feel more achievable. There are a lot of online budgeting tools out there to help make this process easier, including Credit Canada’s all-in-one, free Budget Planner + Expense Tracker. This tool will let you know when you are over or under budget, and how your spending compares to general spending guidelines so you can easily make adjustments.
3. Remember to set money aside each month
Whether you’re saving for retirement, an emergency fund or a vacation, putting aside money every month helps you tackle expenses without sacrificing your debt payment obligations.
Every time you get paid, take a small percentage and put that money into a savings account, like a tax-free savings account (TFSA) or high-interest savings account. Aim to set aside between 5% and 10% of your monthly income to put towards savings. However, this number can vary based on individual financial situations. Your bank or financial institution can help you set up automatic withdrawals to take money out of your chequing account and put it into a savings account every time you get paid.
4. Review your credit card and bank statements
Looking to reduce your expenses in 2024? Be sure to review your credit card and bank statements each month. By knowing where your money is going, you’ll be able to recognize where you can cut back.
Auto-payments are a helpful setup for many to stay on top of their bills. However, you may end up paying for something you don’t use anymore, like a streaming service or gym membership. Be sure to evaluate your auto-payments and cancel any services you no longer need. For those services that you’re keeping, give some thought to how much of an increase to expect in 2024. By reducing or decreasing your expenses, you’ll be able to boost your savings and/or pay off debt sooner, which means you have a better plan for your financial goals.
5. Explore debt solutions with Credit Canada
Even if you pay your credit card balances on time or don’t carry a lot of debt to begin with, there are steps you might not have thought about that can help reduce your debt load faster in 2024. For example, if you’re expecting a raise or you received a year-end bonus, consider using that extra income to pay any outstanding balances. Start with those that have the highest interest rates and work your way down. Then, think about consolidating any remaining unsecured debts, which may help you swap varying interest rates on multiple loans, credit lines or cards for a potentially lower rate on a single loan.
Save – MoneySense. (2023-12-20 16:12:01). www.moneysense.ca
