Setting up and living with a realistic budget – can be one of the most effective tools in your personal debt management plan. It can help you to get and keep control of your financial life – and help you to pursue your life goals. Below are simple steps to help you set up your own personal budget. Everyone is unique – so make sure your budget reflects your financial reality by including all of your financial details accurately.

Identify Your Expenses

The first step in establishing a budget is find out what your monthly expenses are. Write everything down on paper or use a computer spreadsheet – whichever is easiest for you.

Begin with your fixed monthly costs - rent or mortgage payments; loan payments; credit card payments; strata fees, etc.

Add in your variable monthly costs - utilities, food, gas, clothing, entertainment, etc.

Include those infrequent expenses that only happen once or twice a year such as home and car insurance; vehicle repair; taxes; holidays; birthdays, etc. Divide your infrequent expenses by 12 to calculate their average monthly costs.

Show any and all of your expenses that do not fall into the above categories.

Use your bills, bank statements and credit card statements to fill in any gaps and to make sure you have the right figures. Be honest with yourself - list all your expenses, as accurately as possible. Record how you really spend your money.

Identify Your Income

Use your pay stubs to identify what your monthly after-tax, take-home pay is. Remember, if you are paid every two weeks to multiply your pay by 26 and then divide by 12 get your monthly pay income. Include money that comes in regularly from all sources (ie, alimony, commissions, second job, etc) in your monthly income.

Identify Those Things You Want to Save For – or Payoff

Be specific and realistic in setting your budget goals. Do you want to pay down your credit cards? Save for a down payment on a home? Pay off your loans? Save for your emergency fund? Save for your retirement?

To set real goals - you will need to know what exactly they will cost. For example - if you want to pay off a loan; How much is the loan? What are the current monthly loan payment amounts? What are the contract conditions for paying off the loan? If there is a penalty for paying early – how much will it be?

By setting specific and realistic monthly budget goals, you will be able to accurately measure your success – and motivate yourself to continue.

Setting Up The Budget

Total up all your expenses and your income. Compare the two totals. Is there enough left over to achieve your goals? If not, you need to either reduce your expenses or increase your income.

Work your way carefully through your expenses – are there ways you can cut back? What would be realistic ways for you to cut back on your spending?

Take a look at your income – are there realistic ways you could increase it? Can you handle a second job for a short while as you get your finances in shape? 

Use the information you have gathered and set up a monthly budget sheet that allows you to track your budget and your progress. At the bottom of the page is a simple budget layout that you can use to track your budget – customize it to meet your needs, or design your own – whatever works for you.

You will need to record everything in your budget sheets - every month. Chart your successes. Learn from any slips – and stay on track.

During the first few months on your budget you will need to constantly evaluate your goals and performance to shape your budget into a realistic and doable part of your life.

Stay on track with your budget and you will find yourself in control of your financial life – and closer to achieving your personal goals.

Click here to view our printable budget worksheet >

When a Budget is Not Enough

If your finances are driving you to consider Personal Bankruptcy or making a Consumer Proposal, it is recommended you contact a Bankruptcy Trustee in your local area to discuss all of your options. With six offices in the Greater Toronto Area, David Sklar & Associates offers a Confidential & Free Initial Consultation to discuss your situation – and help you determine what your best options are. Call 416-498-9200 or get started with our Quick Assessment Form to book your Free Consultation with the experts at David Sklar & Associates.

David Sklar & Associates – Bankruptcy Trustees – Greater Toronto Area

Confidential & Free Initial Consultation

Call 416-498-9200

or Get Started with Our Quick Assessment Form Today

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