Most of us have money goals. Saving for that new phone. Paying off our debts. Buying a home. From significant, life-changing investments, to smaller but meaningful purchases, we know we need a plan to turn our goals into reality.
That’s where a budget comes in. When you create a budget, you are making a plan for your hard-earned income and taking one step closer to achieving your financial goals.
Why is Budgeting so Important?
You probably have a reasonably good idea of your essential expenses every month. You know what you need to pay in rent or on your mortgage. You know roughly how much you spend on groceries, utilities etc. You have a handle on other big expenses, such as car loans, insurance, and childcare.
However, you may be less successful at staying on top of your non-essential expenses. The cup of coffee you grab when you’re out. The takeout dinner you buy after a long day at work. The birthday presents you select for friends. The little treats you buy yourself without even thinking twice.
These types of occasional purchases can add up fast. Without a plan, you can lose track of how much you’re spending. This can leave you with less money than you were expecting and unable to meet your financial goals.
Budgeting is an essential money management tool. It helps you track your spending, meet your financial goals, and prevent you from accumulating new debt. When you can implement a budget, you can reduce your financial stress and take control of your money and your life.
How to Create a Budget
Making a budget for the first time can seem overwhelming.
At Climb, we know that a practical budget needs an easy-to-use budget planner that will effectively keep track of your finances. While there are many options for how to create a budget, we think simplest is best.
That’s why we created a simple PDF that our credit experts use with clients to get a clear view of their income and spending each month.
And now, we’re sharing our monthly budget planning worksheet with you.
Here’s how to get started:
- Gather up your pay stubs, bills, and account statements. You’ll want to have as much information as possible to get as clear a picture as possible.
- Enter your information into the planner. Don’t worry about calculating subtotals and totals–this will be done automatically for you.
- A quick tip: for any expenses you don’t make every month (such as haircuts or buying presents), calculate how much you spend on those expenses annually and then divide by 12.
Once you fill in your monthly income and expenses, you can see what your overall balance is for the month. If your income is greater than your expenses, this will indicate the additional money you have leftover. This extra money can go towards one of your money goals! If your expenses are greater than your income, this will indicate how much you’re overspending by. To reduce your overspending, you will need to review your expenses and adjust your spending habits where you can.
Review Your Budget
You’ve set up your budget! Now what?
It’s essential to keep reviewing your budget so that you can stick to it. At the end of each month, compare your budget to what you actually spent. This will help you adjust your budget if there are any changes to your income or expenses and to keep an eye on if certain costs are creeping up more than you’d like.
At Climb, we work with you to rebuild your credit and help you meet your financial goals. If you are looking for more support on creating and sticking to a budget, contact us to book a budget and credit planning session with one of our expert credit consultants.
Author: Ryan Watt, CEO
