Determine your monthly budget
It's easy to feel overwhelmed when you think about your finances, especially when you're in good debt. The best way to determine your monthly budget is to start by detailing your monthly family income and your total monthly expenses. To make it easier to analyze, it is ideal to distinguish two categories: fixed and discretionary.
Fixed expenses : Fixed expenses are those that are relatively the same each month; often they occur on the same date each month. They are generally non-negotiable, including for example: mortgage payment or rent, car and home insurance, car loan, other loan payments, credit card payments, cell phone, electricity, alimony (if applicable) and medical expenses such as medication, orthodontic care, etc.
Discretionary Expenses: After your fixed expenses, review your discretionary fees or payments. Discretionary spending can change from month to month. They usually relate to things that households reconsider when they want to cut spending or free up funds. This includes groceries, cable / video services, Internet, gas, outings, restaurant, etc.
The goal of a monthly budget is to determine how much of your monthly income is spent on bills and how much is left for outings and other expenses. It is important to periodically review your spending habits, to ensure you are living within your means, without stretching your budget to the point where you increase your debts. It's easy to pay with a credit card saying “I will pay later”. However, unless there is an emergency (eg, veterinary care, auto repair), it is best to avoid this mentality and spend only what you have on hand.
- Reduce or remove your cable package.
- Reduce your energy consumption (turn down the thermostat and bundle up, the months of cold weather!).
- Reduce water consumption (take faster showers, do laundry less often).
- Eat en route less often - or more at all. It's amazing what you can save by making your coffee at home instead of ordering it from the drive-thru!
- Learn to say NO (eg, gift exchanges at work, outings with friends, special events - when possible).
- Try to negotiate better rates with all of your suppliers.
- Reduce your grocery expenses (or take advantage of the rebate programs).
- Use coupons, search for sales, collect loyalty points for big purchases.
- Buy used when you can. There are great resources to buy used, like the Facebook market, Craigslist or Kijiji. Incidentally, these resources are also excellent for earning a little money! Get rid of your house and sell anything that doesn't interest you or no longer serves you.
Raj Gera, Mortgage Broker with Dominion Lending Centres Pro-lending serves clients across Oakville, Hamilton, Burlington, Toronto, Grimsby, Stoney Creek, St. Catharines, Brantford, Niagara Falls, Kitchener, Waterloo, Milton, Mississauga, and the Greater Toronto Area.