With a calendar or day planner in hand (or this handy Yearly Planner I created), take a look at the year ahead and mark down all the birthdays, weddings and other events you’ll have to purchase gifts for.
Decide how much you’d like to spend on each gift, then start putting money away every week so you have enough to pay for your gift when the time comes!
Do you do something like this already? What are your tips for staying on budget with gift giving?
Not everyone has a consistent income and this can create problems when it comes to creating a budget. However, it's definitely not impossible! It's perhaps even more crucial to have a budget in this circumstance.
Here are a few links that I found with tips to create a budget when you have an inconsistent income:
Here's a quick break down of the ideas to help you create a successful budget on an inconsistent income:
Determine your income streams
Develop a monthly average income estimate
Calculate your expenses to create your monthly budget:- Tally your fixed expenses (mortgage, etc)- Tally your variable expenses (electricity, etc)- With your discretionary expenses (clothing, entertainment, etc), come up with fair dollar amounts based on the lowest income month(s).
Any months that you earn more than normal, put that money into savings for the really low income months so you can still pay your expenses; and even put money into an emergency fund.
Do you live on an inconsistent income? I'd love for you to share your tips!
When we first started to use a budget we really didn’t want to commit to such a boring task. Like many, we were used to tracking expenses in our head and checking in on the bank account to see how much money we had left. Looking back it was probably the worst thing we did for our personal finances and I can’t believe we did that.
How to start a budget
Budgeting can be overwhelming at first but it doesn’t have to be if you plan it out correctly. No matter what your situation or money mistakes are, or were, a budget is necessary. I typically equate this to a business that has a yearly budget so they know what they can and can’t do with the company money. How is a company supposed to sustain themselves if they have no budget? That’s right; they probably would go bankrupt or close shop. Your household budget is just as important as a business.
One of the first things I did when I started to blog at Canadian Budget Binder was put together a 10 step budgeting series. Many people wanted to know how we were saving so much money. It’s not really about how much money we were saving. It's really about how we got to the point where we were actually saving money.
The easy answer was: with a budget. That’s what I’m going to show you today. The steps we took to get from Step 1 to Step 9 and eventually to complete debt freedom. We own our vehicles, have no consumer debt and will be paying our mortgage in full this year. All of this and still over 30 years until retirement (of course we may plan to retire early).The magic happened just from paying attention to our personal finances and spending less than we earn. It also helped that growing up we were savers. But the bulk of our money came just in the past 10 years. Not everyone wants to lead a frugal life, but it has it’s pros and cons and for us, well worth it.
The first step with budgeting
One of the first steps I talk about in my budgeting series is simply “gathering all the information”. You can’t sit in front of an empty budget spreadsheet with no numbers. You need to get all the numbers from your bank accounts, credit cards, lines of credits, bills, whoever you owe, how much you owe, interest rates, due dates, etc. It’s like getting ready to bake a cake. If you don’t have all the ingredients for your recipe how will your cake grow? It won’t. It will sink because all the ingredients (in this case the numbers) are not available.
What is Net and Gross Income?
Net Income in simple terms, is the amount of money that you get after all your taxes are paid. So for those that get direct deposit from your employer that is your net. If you are self employed or no taxes are taken off that is NOT your Net Income, that is your Gross Income.
You can read in more detail each step of our budget and why we did what we did. The budget spreadsheet I designed for our family changed numerous times over the course of the year. A budget will always change and so should yours. You should never just set it and forget it.
There are a myriad of free budget spreadsheets and free budget programs to track expenses on the internet if you do a Google search. If you want to have a budget binder so you can manually track your budget and expenses, then do it. As long as you know exactly what is going in and what is going out. Some people chose to use a cash system and put it in envelopes or jars. If that’s what it will take to motivate you to start budgeting, then do it. You will see over time how easy it becomes and you will continue to challenge yourself further each month. We no longer carry cash we use credit cards for rewards. I don’t recommend this unless you are at a stage where you can pay your credit card in full every month.
9 Steps for Creating a Budget
Step 1 - Gather all the information - As mentioned above, the first step in designing a budget is to gather all the information. You will need to get all the numbers from your bank accounts, credit cards, lines of credits, bills, whoever you owe, how much you owe, interest rates, due dates, etc.
Step 2 - Categories - Every person/family is different so you need to decide what categories will suit your budget. You may need daycare while another family does not, for example.
Step 3 - Tracking Receipts - This is so important and I can’t stress that enough if you want to know where you are spending your hard earned dollars. Have a plan in place so you save your receipts and input them into your tracking spreadsheet.
Step 4 - Note Taking - Always make notes so you can backtrack information. Know where the purchase was made, how you paid for it, dates, etc.
Step 5 - Organization - Keep organized and keep your workstation free from distractions.
Step 6 - Who Does What and When - If you are in a relationship, budgeting doesn’t have to be a one person job. In fact my wife and I both share the budget duties as a team. If in the event something should happen to one of us, we both need to know what is happening with our personal finances. Don’t put the burden on one person.
Step 7 - Balancing Our Budget - Your budget has to balance each month. If you can’t balance your budget you have to do one of 2 things: Make more money or spend less than you earn.
Step 8 - Reading Our Bills - I can’t tell you enough to make sure you always read your bills and receipts when you are shopping. There have been times when I found errors on my communications bill where they charged us for services we did not get. You may also notice the wrong price on your grocery bill. This could result in a scanning code of practice where you get the item free up to $10, if the store participates. Most importantly, you catch an error where you were paying more than you should have. So many people get burned by not reading.
Step 9 - Projected Expenses - This is a big category for us. We save close to $15k a year in it. What is it? In short, it’s an account where we keep money for items that we know we will have to pay for at some point during the year that our regular budget won’t be able to handle. We were always taking money from our emergency savings for these items which was wrong. A sticker for our vehicle once a year is not an emergency but should be saved all year long so the money is ready to be used when it comes due. We save $7.50 a month in a separate account for 12 months to pay for the sticker. $90/12 months. This has been the biggest stress reliever for us and one of the biggest reasons people fall off their budget. If you don’t factor in the small stuff, you may not have the money to pay for it. You should budget it in and save it.
Another thing that can really help when you're overwhelmed or paralyzed by the thought of budgeting? Create a plan to stay focused! Check out this thoughtfully made BUDGET PLANNER – pages to help you achieve financial goals, track your bills and spending, discover what you did well, what you need to improve on and so much more!
I encourage you to take a deep breath if you are wanting to budget but are feeling stuck in getting started. Start living instead of existing and take back control of your personal finances. A budget is just one step in the process in working towards debt freedom, but one that may allow you the opportunity to drop that debt and get back in the game. Time to look at a budget as part of a lifestyle rather than a chore.
Mr.CBB is the voice behind Canadian Budget Binder a blog about Personal Finance, Relationships, Recipes, the famous Grocery Game Challenge and more. Join him on Facebook, Twitter and Pinterest.
Just wondering if you know of good financial institutions in Canada to bank with that have low or no service charges? Also, do you have any advice on how to close a bank account and not be charged a fee for doing so? Thank you.
Have you got a question that you would love Simply Frugal readers to help answer? Send it my way and I’ll possibly post it as a Reader Question!
The following post is a guest post by Leah! Enjoy!
According to Industry Canada, revenue from cosmetics, beauty supplies and perfume stores, reached 1.4 billion in 2014. It is so easy to get caught up in the latest products and spend money needlessly. Here are a few tips for looking great and saving money!
6 Ways to Save Money on Makeup
1) Simplify your routine. Stick to the basics. Moisturize, apply foundation only where you need it, a little liner, blush and lip gloss and you’re done!
2) Double duty products. You don’t need expensive under eye cream if you have normal to oily skin. Just use your existing moisturizer. Cream blush can double as a lip stain. Use light pink shimmery eye shadow as highlighter for your cheekbones.
3) When purchasing products, check for bonus packs. Most will come with a great basic like black mascara or liner. Get to know where your favorite store keeps their discounted makeup and buy what you need not just because it’s cheap.
4) Get more out of what you already have. Use a lip brush to get the last bit of lipstick out of the tube. Foundation tubes can be cut to access more of the product (store in a sealable bag so it doesn’t dry out). If you buy a lipstick that is the wrong colour don’t throw it out! Be a makeup artist and mix it with other colours you already have for a custom look.
5) Look for inexpensive alternatives for the products you love. I was shocked the last time I had to replace my liquid eye liner. I then decided to give Essence cosmetics at try (you can find them at Shopper’s Drug Mart) their liquid eyeliner is a mere $2.99 and it is amazing. They also have tiny bottles of nail polish for next to nothing. Great if you want to try a new colour without spending a fortune and finding out you hate it. They have a complete line of products so have a look and see what you can discover.
6) Don’t get caught up in the frenzy of a new product. If you know something works well for your skin, stick with it. This is especially true if your skin tends to be sensitive. In the long run you’ll save by not wasting money on products that just end up sitting on the shelf.
We’re all going to buy products we “thought” we were going to use. Yes, I was the one that bought the dry shampoo – oh well! Just remember that above all else you’re beautiful because you’re you – and that is priceless!
Leah Leitch is a mostly stay-at-home mom to two wonderful teens. She loves to write and wonders why people exercise when they can get just as many endorphins from scoring a great deal?
