When the sun is shining, the last thing you want to do is hide away inside and pour over your finances. There’s yard work to do, the latest Mummy reboot to see, and brand new craft brews to drink, and let’s not forget about enjoying the beautiful weather. As much as creating a budget ranks low on your summertime bucket list, it’s a necessary step before you can make the most of theseason. A well-crafted budget can make sure you can buy the tools, movie tickets, and IPAs you want.
That much is obvious. After all, an accurate budget gives you an estimate of your daily, weekly, or monthly cash coming and goings. Once you account for all of your regular necessities — right down to the very last loonie — you know how much extra cash you have to spend on all of the fun stuff.
What may not be clear is where to start. Luckily, this handy guide can help you craft your very first budget, with 3 simple things you must know before you begin.
- Know Your Income
This is where it all starts. How accurately you tally you income will affect how successful your budget is in the long-term, so it’s important you use exact numbers. In particular, make sure you use your net income as the basis of your budget, as this is what you make after taxes and any other deductions are taken out of your pay cheque. To use your gross income, or the quantity before these contributions are removed, would set your budget up for failure, as you’ll assume you make more than you actually do and promise cash you don’t have towards important payments like rent or insurance.
- Know Your Expenses
You should make a tally of your regular and variable expenses with the same dedication to detail you applied in the first step. While you’ll know consistent payments like rent and cable off by heart, you may have to do some research to list all of your monthly charges. Sign into your bank account and collect your chequing and credit card statements from the last 6 months.
Grab highlighters and assign a different colour to each category of spending, so you can have a quick, visual reference for how you spend your money. Don’t let any purchase go unaccounted for, using ‘miscellaneous’ if you’re ever unsure of which grouping it belongs in. Leaving even unusual, irregular charges can put your budget at risk of failure.
- Know Your Goals
While knowing how you spend your money is eye-opening, the ultimate purpose of your budget is to help you plan for future events. By subtracting your monthly expenses from your monthly income, you’ll have a good understanding of how much of your pay cheque you retain each month. With this sum, you can start preparing for the future.
Ideally, you’ll have a positive differential. Experts say it should account for anywhere between 10% and 20% of your total income. This is share can protect you from emergencies. It’s also enough so you can contribute towards investments and retirement plans.
If, at the start of your budget, your modest nest egg is too small to cover unexpected bills, repairs, or household purchases, then a payday loan from a nation-wide lender is a great backup until you build-up your savings. The payday lenders at GoDay offer faster, more convenient loans than conventional lenders, so they’re an ideal alternative to favours from family or elaborate assistance from banks.
They can offer fast-access to cash because they’ve cut out a lot of the bureaucratic red tape that slows down traditional lenders, so they’re perfect for small, non-recurring emergencies that have a fast-approaching due date. To see how quickly your application can qualify and be approved, head to GoDay.ca and fill out the necessary forms. In some cases, your application can be fast-tracked to allow for same-day lending.
Once you start socking away money from each pay cheque, you can put your need for these lenders behind you. But you can only do that if you spend the time this summer to work on your budget. Use this guide to help you assess your income and expenses, so you can prepare for the future — and try the latest brews too — without putting your finances at risk!