Creating Your Personalized Budget

I started working when I was eight years old. Ahh yes, I remember the day I got my first job. I was "helping" one of my older brother deliver papers. We were a team, he and I. It was winter time, and what little eight year old can resist a good snowman?! Like any child with a creative curiosity, I started to create. I started building the best damn snowman my eight year old muscles could carry. Problem was, I was neglecting my duties as paper girl helper. My dear, sweet brother could only take so much. In a fit he threw all of the papers at me and told me I could work on my own. Sigh. So that was the day I earned my first job. And I've been making money and being confused about what to do with it ever since! We grew up poor and money was never really saved very well so it took a lot of trial and error figuring out how to manage it.

Fast forward to my university days and I realized money was tough to come by and I hadn't saved enough (read: anything). It wasn't going to be cheap, OR easy. Thank goodness for student loans! Problem was, once I crossed that stage and grasped that big, beautiful degree in my hands I was left over with some serious student debt. I mean I am naturally a frugal kinda gal, but I chose one of the most expensive universities in the country (no regrets, awesome school) and that certainly did nothing for my bank account.

Creating a budget

No, no, no - making minimum payments on loans just would not due. The only thing that causes me more stress than thinking about debt is thinking about paying out my hard earned money in interest fees! So I cracked down on my finances. In the past six months I've already paid off over $20,000 worth of debt. AND a moment of excitement here, can I get a drum-roll please? Yesterday I managed to pay off one of my loans in entirety. That was an exciting cheque to write! Umm, I may or may not have taken a picture of it... *Self proclaimed geek*

You want to know the best part? That $20,000 wasn't actually all that hard to come up with. All it took was some honest planning and budgeting and one financial goal that I refuse to fail at achieving. Budgeting though... that was the key.

If there was one thing I could change though it would have been those first seven months I lost after graduation where I only made minimal payments on my debts because I hadn't properly planned. That means I lost hundreds of dollars in interest fees. So my advice to others riding the debt train? Don't waste another minute, get started NOW!

Lay it all out there

When creating a budget you'll need to figure out what works for you. If you're good with a computer and enjoy using programs like Microsoft Excel, you'll love building your budget there. If you prefer to have your budget easily and always accessible go out an pick yourself up a notebook.

Income

Now you're going to need to identify your income. This is all sources of income to your household including your partner's income if you have one. Include everything that brings in money, even your Hubs earnings!

Now you'll need to make a list of all of your monthly fixed and variable costs. Here is a list to help you get started:

Fixed Costs

Mortgage/Rent

• Power bill
• Energy bill
• Phone/Internet bill
• Cable/Satellite bill
• Water bill
• Car insurance
• Life/Medical insurance
• Home insurance
• Other

Variable Costs

• Food
• Transportation costs (gas, vehicle maintenance, bus passes)
• Personal (clothes, soaps, toothbrushes, etc)
• Gifts
• Fun/Entertainment
• Home expenses (allocate more if you own your home for unexpected repairs)
• Pet costs

You should also factor in a vacation allowance if it's a part of your lifestyle. You'll need to plan for these expensive expenses. An easy way to do this is to see if your bank offers a high-interest e-savings account. You can set up easy automatic monthly withdrawls and your money can earn interest in it's own account so you're not getting it mixed up with your spending money.

Investing

Regarldess of how much debt you have it's always a good idea to get started on your Registered Retirement Savings Plan (RRSP). Even if your contributions are minimal, they will add up over time. Another great investment option that's relatively new for Canadians is what's called a Tax Free Savings Account (TFSA). Speak with your bank about what options are available for you.

Saving

Let's face it, life throws curveballs. No problem, it'd be boring and predictable without them, right? Problem is when we don't plan for them they can become more stressful than they need to be. No one plans to be in a motor vehicle collision and be out of work for a few months. No one plans to need $2,000 to fly across the country to be by a family member's side. These are things we don't want to think about but having the money set aside to be able to handle the bumps in the road sure make life a lot easier and a lot more peaceful. Be sure to allocate savings for those unexpected moments and save yourself from future grief. And that TFSA is a great place to hold onto it.

Hopefully you agree with the importance of making a budget early on.  This can keep you from falling between the cracks in the money game.  Good-luck and happy planning!