You made it this far so you must be curious how we went about designing our budget. Don’t yawn, it truly can be a fun experience especially when you see your savings grow!
So…. Let’s get at it!
You know all those bills you have in a shoe box or in the “junk drawer” it’s time to fish out those paper critters and get organizing. Some of the steps we took to get organized in preparing our first budget are:
Gathering All The Information
- Locating all bills including credit cards! Anyone you owe money to including the mortgage/rent.
- Organizing bills into piles by date ie: Rogers, Union Gas, Hydro, Reliance or finding data from logging into the respective websites
- Make a list of dates and cost of each bill in an excel document
- Make a list of dates bills typically need to be paid by but this may vary.
- Make note of interest rates if you are not paying bills off in full. If you don’t know get on the blower and find out!
- Make note of the cost of each bill whether it was variable or fixed
It was imperative to ensure we had all the information at our finger tips so we could accurately design a budget for our needs. It’s important to remember that every penny counts so you don’t want to forget anything.
If there is a certain bill you cannot locate call the company and ask for assistance. Don’t put off the budget until next month as the time is NOW!
We then made a list of everything we knew we would have to pay for each year for example,
- Dog licence
- Stickers for vehicles
- Krown application on vehicle
- Tax prep
I think you catch my drift, if you know you are going to pay for it, save for it! I know you can’t possibly think of everything so keeping a miscellaneous section in your budget is key.
Once you have all your debts, variable ie: grocery,miscellaneous,pet, transportation etc and fixed expenses ie: mortgage,taxes, insurance etc you can start to put your budget together.
Another important point to remember is using your net income not your gross income. Some people may believe your gross income is the golden ticket but its your net income that puts a roof over your head and food on the table.
Net Income = What you take home at the end of the day once all deductions are paid (taxes, expenses etc.) Essentially it is the amount deposited into your bank account from your employer. (Note: If you are self-employed you need to know what your net and gross figures are)
If you have any other income sources these figures are also important to factor in but to me if they are variable then I don’t count them as fixed income more as variable income as it can fluctuate. It’s not something I personally would design my budget around . It’s a nice to have at the end of the month and more for your savings.
If you have to design your budget around a variable income try to collect 6 months of income and do an avg income to base it on. Unless someone has another suggestion I’m not too familiar with this type of income.
- Document, Document, Document everything!
You have done plenty of work today, take a deep breath, pat yourself on the back and come back to read where we went from here.
Read on with Step 2 in designing our budget.
Please feel free to comment or ask a question.
What were the first steps in designing your budget?
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