Research shows that 9 in 10 homeowners in Canada between the ages of 25-44 years old have mortgages. As we all know by now, the responsibility of keeping a household is about more than maintaining a pretty garden.
You need to be able to budget. However, it’s not only homeowners who struggle when saving money and managing their finances. Thousands of Canadians have the same problem.
But, with the right budgeting methods, anyone can learn how to live within their limits and keep their debt at bay. Are you looking for some tips for creating a budgeting plan?
Then, keep reading to find out about some life-changing ways you can put money aside without losing your quality of life.
Why Is Budgeting Important?
As we get older, it becomes harder and harder to balance work and your personal life. You have to pay rent, fix appliances, and make time for going on holiday with your loved ones.
For most of us, this can put a strain on our well-being and make us stressed. Although, using budgeting methods can offer some relief from your money troubles and help reduce stress when your bills arrive during the month.
In general, budgeting is important because it helps you achieve your long-term money goals. For instance, if you’re looking to save enough money to put a down payment towards a house then you need to be able to save.
Having a financial budget allows you to work towards a reward that will make you happy and you’ll feel proud of yourself for being disciplined during the process.
After a while, you become used to your spending habits and can start making decisions about investments with the confidence that you will be able to pay for them eventually.
So, here are 7 ways to make a simple and easy budget to follow.
1. The Envelope Method
All you need for this kind of budgeting is a pen, an envelope, and some cash. It’s that straightforward!
For decades people have been using this type of budgeting to gain control of their bank accounts and stop themselves from overspending. It can be ideal for people who don’t like dealing with numbers and prefer an offline option.
Once you have the materials and cash ready you can separate your expenses into different categories. You should allocate a certain amount for food, travel, and personal purchases.
After you’ve decided on the amount you’ll give yourself for the month, you can write the name on each envelope and put them away somewhere safe.
The hardest part is keeping yourself accountable for the budget plan. So, just remember to be realistic about your spending habits!
2. 50/30/20 Method
Compared to the envelop method, the 50/30/20 model is suited to people who like to break their income into sizeable chunks. The good thing about this budget plan is it stays the same every month.
The way it works is, that 50% goes to basic needs like rent, 30% is used for wants such as gym memberships, and 20% is allocated to savings. As long as you remember the percentages, you can’t go wrong with this method.
So, if you lead a busy life and don’t want to worry about how much money is being used and how much you have to spend, then the 50/30/20 trick could be for you!
3. Zero Budget
Now, the zero budget is not what you think.
It doesn’t mean that you don’t need to save at all.
Even though you might be tempted to overlook your savings account when you see a shiny new bag or piece of clothing you want, you must plan carefully for any sudden expenses that might come your way.
Thankfully, the zero budget can help you with organizing your money. The only downside of budgeting methods like this one is that you need to know exactly how much is coming into your account every month.
The way a zero budget works is all your money is put towards different investments. That means a certain amount is spent on housing, expenses, and filling your retirement fund.
It can be useful if you want a strict structure and thrive with detailed planning.
4. Value Budgeting
Seeing that budgeting can be overwhelming for most people, it can help if you prioritize the things you care about most. After all, you’re working all week to be able to live your life to the fullest.
So, you need to be sure that you can afford the things that make you happy!
Therefore, the first step in value budgeting is writing a list of the most essential part of your monthly budgeting. For example, do you like to travel? Or, do you enjoy spending time at the movies?
Then, you should ensure that all these things are on your list. Otherwise, you might end up spending all your money on savings and food.
Although these aspects of your budget are important, you want to balance your spending on recreational activities as well as basic living costs.
5. Digital Pot Method
Similar to the envelope method, another great way to budget is using digital pots. This is a new invention that banks are implementing on their online accounts.
It works the same way as cash, but you can move money around into various pots. Plus, you can find this feature on mobile apps so you can shift money around from anywhere!
In the modern world, people are traveling more and some are working as digital nomads. Therefore, traditional budgeting methods are more complicated if you’re not in the same place all the time.
But, with this style of budgeting, you can keep on top of spending and check on your savings every month.
6. Save First, Spend Later
Saving is not always the first thing on your mind when your paycheck arrives. In most cases, you want to treat yourself and make use of your hard-earned cash.
However, it might be a better idea to put money into your savings before you hit the shopping mall. This way, you can take care of your future and not feel guilty about splurging on some treats.
In addition to being efficient, it’s also easy to remember.
7. Create Your Own Budget Plan
Ultimately, no one knows your bank accounts better than you. If these options don’t suit you, then there is always the option of creating your own budget plan.
To begin with, you should ask yourself some questions. But, you have to be honest about the answers if you want to succeed at saving and controlling your spending.
Here are some of the main questions you should think about:
- What is my biggest problem with spending?
- Why do I find it hard to save?
- Is there something I can cut from my expenses?
- How can I fit my recreational activities around living costs?
As long as you write down the answers to these questions, you will be able to construct your own budget plan in no time. However, you can also reach out to us if you need a little extra help.
Benefits of Budgeting
You might think that budgeting is boring and pointless because you can pay your bills on time, stock your fridge, and spend time with friends at the weekend.
But, without savings, you can run into problems later on if you don’t have enough money in your account. The best way to prepare for the uncertainty of the future is to budget your money wisely.
Without a doubt, one of the benefits of budgeting is the sense of security it gives you. After the pandemic, everyone realized how uncertain work is. However, creating a budget can help you feel calm.
By dividing your money between certain costs, you can save towards something enjoyable over time. You don’t need to miss out on having fun when you’re budgeting. But, it will give you a safety net.
And, let’s be honest, it’s nice to have the comfort of financial security when things get hard.
If you’re struggling to cover your costs, then don’t worry, you’re not alone. After this pandemic, many people are feeling the consequences of the poor economic global market.
Luckily, our business is here to offer you a helping hand.
Find Budgeting Methods That Work for You
Now you have a list of budgeting methods for a range of lifestyles from digital nomads, to corporate leaders. Finding the right financial plan is about assessing your personal situation.
You need to determine your priorities and fit your budgeting around the things you want to have in your life. Then, you can think about saving money and covering household costs.
As you can see, it doesn’t take long to get the hang of budgeting. Anyone can do it!
If you want to find out more about our credit loans then reach out and talk to one of the team.