If you are having a hard time making your money last until the end of the month, or finding it hard to save anything for the future, creating a budget may help.
A budget is a plan to help you keep track of your money, and can give you a clear picture of where your money is going. The goal of a budget is to make sure that you don’t spend more than you earn. This way you may avoid debt and maybe even free up some money to save. To create a budget, start by looking at your expenses over at least a month. This includes even small items such as snacks and coffee.
Once you’ve done this, divide your expenses into two categories: fixed and flexible. Fixed costs are things like rent and utilities — things that are necessities and occur every month. Flexible costs are things that you spend money on – like clothing – but may vary each month.
After you’ve listed your expenses, take a look at whether the money going out is more than the money you have coming in. If that’s the case, you need to prioritize your non-essential expenses, things like going to the movies or eating out. That additional cost of buying lunch everyday can add up to a notable sum at the end of the month.
And after all of your expenses, if you’ve got money left over, try putting away even just 10% of your income. Knowing that you have savings tucked away for your future, or unexpected expenses is a great way to know your budget plan is working for you.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.