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5 Things to Know About Creating Your Personal Budget

Posted by: Gavin Au-Yeung Date: April 6, 2020 Category: Blog

Congratulations! You’ve just moved to Canada and you are ready for your new life. While starting your life here can be exciting, it is also a time of uncertainty. As a result, it is important for newcomers to manage their finances so that the transition from one country to another can be as smooth as possible. Making a detailed budget will be crucial for keeping track of your personal finance.

A budget is a spending plan which takes into consideration how much money you make (income) and how much money you use (expenditure). Creating a personal budget will allow you to better understand how your money is being used. In addition, a budget will also allow you to plan how your future money can be spent. Having this knowledge in advance will allow you to consider how you can or cannot spend.

Budgets can be used over long (yearly budget) or short (daily budget) periods of time. Furthermore, budgets can be used by individuals, families, businesses, or even government. Anyone working with budgets will understand how useful it is for managing finances. In this blog, we will look at five tips for creating your own budget.

Identify income and expenses

The first thing to starting a budget is to identify how much money you are able to access. This is simple, because you should already know how much money you are earning. Identifying your expenses will be a bit more difficult. Keeping track of every expense throughout the day is probably the easiest way to record your expenses. While it may seem tedious at first, taking note of your spending habits will allow you to compare your income with your expenses. Once you have identified your income and expenses, you should have a general understanding of your current financial situation. Simply put, you do not want to spend more money than you have!

There are many software and applications available which will help you manage your spending.

Identify the Essentials

Some things are essential for living; these expenses will be unavoidable. For example, food, shelter, utilities, clothing, and transportation can all be considered essential. Identify how much money these essentials will require and immediately put that amount aside so that you won’t find yourself in trouble when the rent is due.

Keep Track of Every Dollar

Good budgets will give a purpose to every dollar. This means that all your money will have an assigned role. You should have a plan about how every dollar is used. It may be difficult at first to stick with the plan, but this will help you to avoid overspending or reckless spending. Distribute your income so that you know exactly how many dollars you will be using on rent, food, transportation, savings, and so on. The more detailed you are, the better.

The bottom line is that you give a clear purpose for every dollar in your budget.

Plan ahead

Not every month will be the same. Certain events or occasions may lead you to spend more money. For example, people tend to do more shopping around December because of the holidays. By planning ahead for future months, you can reduce the shock of added expenditures when they inevitably come. Prepare as much as possible by having backup plans for the best and worst case scenarios; and anything in between.

Be flexible

Life is full of surprises. While sticking closely to your budget is highly recommended, it is ultimately up to yourself to decide if your personal budget needs to be altered. You may need to allocate more money towards food on month, or transportation another. Keep track of these changes in your life and adjust your budget accordingly.

New to Canada?

Budgeting will be a key tool for personal finances, especially for new Canadians who are looking to enter the workforce. Internationally trained individuals in Alberta and Saskatchewan who are looking to return to their original careers may be eligible for the free career counselling and support services provided by Career Loans. Career Loans will also assist with a loan application for up to $15,000 to be used for getting you back on your career track. Find out if you are eligible at www.careerloans.ca

For more budgeting tips, visit Money Mentors or My Money Coach for more online resources and courses.

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Career Loans provides career counselling and micro loans to Internationally Trained Individuals in regulated and non-regulated occupations and trades, who are looking to return to their chosen profession.



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