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Creating the perfect budget

on Sun, 11/04/2012 - 09:10

I have been hearing more and more people saying they cannot do a budget (not just people who feels they can't, but also people who have been done relatively well in their savings), ultimately, everybody feels that there is not enough savings (which is a good thing).

A lot of people have very negative thinking on budgeting. "Cut backs, tracking every penny and cannot have fun anymore..." are what they have in mind when they heard of budgeting, but really, budgeting is about figuring out how much you can spend after your bills. That allows you to make sure what is important is being taken care of (in other words, all bills get paid). 

Allocate your money on paper before it comes in.
 
How much do you take home every month? Make it a bi-weekly calculation if that is how you get paid.

Then, find out what your fixed expenses are. Rent/mortgage payment, maintenance fee, utilities, cell phone, internet and cable/satellite, car payment, home & auto insurance, gas (use an average) or monthly transit pass, child care, gym memberships, property tax (average it out to a monthly amount), parking, tuition... list them on a spreadsheet.

Put all expenses accordingly onto the spreadsheet, and allocate them throughout the month (to specific pay if possible according to the date of the bills needed to be paid)

Then add any other expenses needed to be taken care of, like church offerings, health spending account, insurance premium, kid spending+ allowence, savings+investments, etc... (Note that you have to save, no matter what is going on...)

Next, add any debt payments to the list

you should ended up with something like this:

Calculate what is the total amount you spend on expenses and savings & protection needs.

With what's left, you want to make sure you alocate some play money, some money for clothing and personal use, more saving (as we can see this particular example is not saving a whole lot). Then, we want to try to pay down the debt (we will explore this some other time).

In a normal case, we want to make sure we do not spend more than 35% on housing, less than 40% on debt repayment (or less than 60% on monthly expenses), 10-20% savings, 10% insurance premium, 5%-10% income protection.

Getting a budget in place in not rocket science, it just need commitment and discipline. Having a financial advisor make it easier as you will not feel you are all alone. Let me know if you need my help.

"Budgeting is not about restricting spending, it's about figuring out how much you can spend after your bills."

 

 

 

 

Comments

Ashley Carlson's picture

Hey, thanks for writing this up. I've been looking at several blogs to find something like this. Do you by any chance have a contact email that you could share? I would like to contact you directly.

Regards
Ashley
Google promoter

trufinancial's picture

Hi Ashley,

Thank you for your compliments. I am happy to know that you find this useful. Please use our contact form (http://trufinancial.drupalgardens.com/contact) on our site and I can respond you directly.

Mimi

Edgar's picture

Budget is important for the creation of good project. 

jack13's picture

Hey, thanks for writing this up. I've been looking at several blogs to find something like this. Do you by any chance have a contact email that you could share? I would like to contact you directly.       

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