Budgeting 101: How to Start Budgeting Your Money

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 spendingmeet 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:  

  1. 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.  
  2. Enter your information into the planner. Don’t worry about calculating subtotals and totals–this will be done automatically for you. 
  3. 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

How to Budget as a Couple

When it comes to important relationship milestones, moving in with a significant other gets all the attention. It’s true that sharing the same space with someone is a big deal – and a reliable indicator of a relationship’s future – but there’s an even more important step that usually comes shortly after: combining your finances.

Learning to share your money is one of the most intimate things you can do. By pooling and managing your resources as a team, you’re committing to each other in a deep and lasting way. You might be able to just move out if a relationship falls apart, but disentangling bank and investment accounts is another story entirely.

That’s why it’s so important for couples to learn how to budget together. Here are some of the ways you can make the process easier.

Craft Your Why

Budgeting is like working out. Some people genuinely enjoy the burn and sense of accomplishment they get after leaving the gym. Others may know it’s the right thing to do, but struggle to find any kind of satisfaction from doing it. The difference lies in finding the right motivation.

When it comes to budgeting as a couple, both parties should understand why it’s important. The reason can be something common like, “Have more money to travel,” but it can also be something emotional like, “Pay for our child’s college education.” The more specific and personal your reason, the more likely it is to stick. My husband and I budget so we can save for retirement and other goals, like remodeling our house and traveling abroad. Try to be honest with yourself and don’t judge your reasons too harshly, even if they seem petty or embarrassing. It doesn’t really matter what your reasons are, as long as you have them.

Choose a System

There are many ways to budget, and each couple should find a routine that works for them. These days, lots of people use apps and software like Mint, Tiller or You Need a Budget. Other people prefer a spreadsheet or cash envelope system.

There’s no perfect budgeting solution, especially for a couple with different personalities. The important thing is that the approach works for both parties. If one person has been managing the money by themselves for a while, they should consider switching to a new arrangement if their partner has a strong preference. Take some time to test drive various methods until you find one both of you like.

One thing that seems to work for most couples is to allocate a certain amount of discretionary money for each person. This is money that both people can spend on whatever they want, without judgment from their partner. My husband and I even use separate bank accounts for that money, so our purchases are completely private.

You should also designate a certain time each week or month to sit down and budget together. Some couples even incorporate this into a date night so it’s a fun activity instead of a chore.

Compromise and Communicate

Budgeting as a couple is like a lot of relationship activities – it can bring you closer together or expose your problems. Money reveals our priorities, so it’s important to keep an open mind and avoid getting emotional. When you disparage your partner’s spending, you’re saying his or her needs don’t matter to you.

Use budgeting as an opportunity to talk about your feelings and your dreams for the future. Compromise when you can and acknowledge what your partner does to save money, like batch cooking meals or taking public transportation.

Budgeting should be a team sport, but that only happens when both people realize they’re not competing against each other. It’s OK if it takes some time to find an approach that feels comfortable, as long as you get there eventually.

Find out how Climb can help you and your partner’s financial situation. Click Get Started below and receive a free Personalized Credit Prescription with recommendations to help you build a better financial future.

About the Author

Zina Kumok is a trained journalist and has covered everything from professional sports to murder trials. Now, she specializes in personal finance and has written for brands and publications such as Mint, Investopedia and Discover. She paid off $28,000 worth of student loans in three years.

New for Climb Clients: Changing Your Payment Date

UPDATE: Climb has extended the free “Change Your Payment Date” option through to May 31, 2020.

Everyone’s lives have been affected by the coronavirus pandemic, and many people’s finances have already been hit hard by the economic impact. We understand the impact will only grow, posing even more of a challenge as our clients work hard to stick to their budgets.

That’s why we’re announcing a new option to Change Your Payment Date. From now until April 30 May 31, 2020, clients can contact us to reschedule their payment date to later in the payment cycle for free. Just make sure you get in touch at least two business days before your payment is due.

As long as you contact us at least two business days before your next payment, we’re happy to help however we can – our goal is to help you along your way, not hold you back with expensive NSF charges. You can learn more about to change your payment date in our Featured FAQs here.

Need more support during the coronavirus crisis?

Did you know that the Canadian Government has waived the one week waiting period and medical certificate requirement for EI sickness benefits if you’ve been quarantined due to COVID-19? This applies to self-employed Canadians, too. Learn more here.

Debt relief is available. The federal government has paused repayment of Canada Student Loan and Canada Apprentice Loans until at least September 2020 with no accrual of interest. The big six banks have all announced that mortgage deferrals are available – you just need to call your bank to get the ball rolling.

Other creditors are also willing to pause payments or restructure payment plans; the big telecom companies and several major utility companies have announced that they’ll make accommodations for people affected by COVID19. If you have a bill you know is going to be tough to afford in the coming months now is the time to call them, before you miss a payment or are hit with an NSF charge.

Don’t lose sight of what’s important. It’s easy to get overwhelmed as our lives are turned upside down. Do your best to stay focused on your goals and stay on top of immediate bills as best you can – even when that means reaching out to a creditor to ask about alternative options.

And most of all, remember there’s nothing more important than your health & safety. We’ve heard from the Office of the Superintendent of Bankruptcies that all Trustee sessions can be conducted via video conference. At Climb, we’re able to maintain our usual business hours and our team is fully operational in their home offices. This aligns with guidance from the Government of Canada and provincial public health agencies to minimize contact with others and maintain social distancing (minimum of 2 metres apart) when you’re outside your home.

These are trying times but working together, we will get past this. Isolation and social distancing is hard but it doesn’t mean you’re alone. Reach out to friends, family and loved ones through text messaging or a phone call – when we support each other it’s easier to stay strong.