Budgeting for Beginners (Guide)

Editor’s Note: This article was originally published on Medium.

Read the original here: https://medium.com/@klarakabelik/budgeting-for-beginners-7e461944cf94

Are you stuck living paycheck to paycheck, or unsure where your money is going by the end of every month? If so, you may be in need of a new budget.

It can be intimidating, I know, especially if you’re not someone who feels comfortable looking at their monthly expenses. But unfortunately, that is exactly something that you will need to do, in order for your financial situation to change. However, it doesn’t have to be scary!

In today’s article, I’m going to be sharing an overview of my digital Girl Boss - Financial Wellness Budget Tracker & Journal which can be found both on my etsy, as well as my ko-fi shop.

Income

The first step is to track how much money is coming in throughout the course of the month. You want to input the date that you are expected to receive your payment, the type - such as where it’s coming from, and the amount you’re supposed to receive. Then, on the day that you get paid, you’ll write down how much money was actually deposited into your account.

Fixed Expenses

The next section of my Budget Tracker, covers your Fixed Expenses. These are bill payments that remain the same month to month, and don’t change. Such as rent or condo fees, a mortgage if you have one, utilities, home or car insurance, your phone and/or wifi bill, any subscriptions you might have, and more.

The same concept applies as in the Income category, in which you will insert the date of those bill payments, their description or type, and how much you’re expected to pay for them. Then, the day that the payment is due, you can write down how much money you actually owed, as sometimes it varies a bit.

Variable Expenses

In terms of your Variable Expenses this is where you will be keeping track of other spending categories that can change depending on the month. For myself, I keep track of purchases such as gas, groceries, additional shopping, dining out, entertainment, items I buy for my home, self-care, gifts, anything I need for work, travel, car maintenance, other types of transportation, and miscellaneous expenses. However, it really depends on your personal needs and desires.

In this section, you don’t need to put the date (although the option is there if you prefer). More importantly, you will label the expense category, such as “groceries”, and put how much you budget for the month in the expected column. Then, once you’ve calculated your grocery expenses for the month, you will enter that amount under actual. When you compare the two columns, you will either see if you saved money, spent the exact amount, or went over-budget.

If you go over budget, it will let you reflect on that month’s spendings, in order to either address your purchase: Was it a “want” or a “need”? Or to re-adjust your budget accordingly so that it covers all of your expenses without over-spending.

How To Budget (Broken Down)

Now that you know the first three categories, it’s important to know what to do in order to budget properly.

The first thing you’ll do is write down your net income per paycheck. Let’s say you get paid every two weeks. If your bi-weekly paycheck is $1500.00, that means your monthly expenses will be coming out of the $3000.00 you make that month.

Next, you want to calculate how much all of your Fixed Expenses cost, and subtract those from your Income. Based on the amount you have left, you can then allocate the remaining money into your Variable Expenses to ensure that you have enough for your basic necessities.

Lastly, if you have any money leftover afterwards, that is the amount that you can contribute towards any Savings, Debt Pay Off, & Investments.

Savings & Debt Pay Off

Before getting too excited and talking about investments, I’m going to cover the basics first. If you have any debt to pay off, or don’t have savings set aside such as an Emergency Fund, that is where I would allocate any remaining money first, before looking at investment opportunities.

Depending on how much money you have left, you should use it to pay off the minimum payment on any loans or credit cards, and put the remaining amount (if any) towards your savings, to slowly build over time.

If you’re in Canada, and you’re looking for a bank account that has a higher positive interest rate than most banks, consider reading my article on Growing Money with Wealthsimple in Canada.

Investments

After you’ve distributed your money into the aforementioned categories, and paid off any debt that you might have, you will want to invest your money so that it grows in compound interest over the next several years.

In Canada, you may choose to open a Tax Free Savings Account (TFSA) or a Registered Retirement Savings Plan (RRSP). If you’re looking to buy your first home, you might be interested in the First Home Savings Account (FHSA) as well.

Or perhaps, you’d prefer to invest your money in ETFs, Stocks, Portfolios, and even maybe Crypto? The possibilities are endless.

Financial Journal

The last part of my product is a section I call the Financial Journal. This is for anyone who feels anxious about money and/or budgeting, and needs a place to document their thoughts throughout the process. It can be good to look back on over time, to reference the progress made in one’s own financial journey.

So, that is all for today’s article. If you found it informative or helpful in any way, please consider liking the post and following along for more content!

Additionally, if you would like to financially support me, you can click the ko-fi button at the bottom, or click here to buy me a London Fog. No pressure either way though, I love you all the same.

Sincerely,

KlaraK.