Creating A Budget
While many people think a budget is a great idea, few actually follow through with creating and sticking to a realistic budget plan. A budget is great tool for helping you make the most of your income.
How budgeting works
Make a plan for several months or even a year—whatever time period you can accurately forecast your income and expenses for.
Use a spreadsheet program like Excel for documenting your budget, that way you can create formulas and totals easily.
- For each week, document your income in one column and all your expenses (fixed, variable and periodic) for that week in a different column. Use our online banking service to access your account statement details so that you can be sure you’re capturing everything.
Once you see what your expenses are, you’ll be able to see if you need to shift income around from week to week in order to cover these expenses. Or, for variable expenses, the budget projection will show you the best week to pay them.
Then do the same for each week in the current month. Once you’re satisfied with your monthly projection, you can copy that plan out to subsequent months and then make adjustments to your plan as you move through the year.
If you find that you seem to be overspending from month to month, chances are that you’ve under-estimated some expense categories—maybe your groceries are costing you more than you thought, or maybe you forgot to factor in your morning coffee routine. In any case, all you need to do is make changes to your budget to reflect more realistic figures.
If you’ve got some aggressive debt payment goals included in your budget, this is great, but don’t create a situation where you are going to be discouraged by not being able to meet the projections—make goals that are realistic and attainable.
Take into consideration your budget cycle. If you get paid at the start of every month and your rent comes out of your account at the end of the month, your budget should take this into consideration to help ensure you can cover all your financial obligations.
Budgeting requires discipline
While many people think a budget is a great idea, very few actually follow through with creating and sticking to a realistic budget plan. It can be daunting facing up to what you are really doing with your money. To run a successful budget it is essential to be honest with yourself about what you’re earning and what you’re spending, regardless of where your money is going.
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