How to make a budget… and stick to it!

How to make a budget… and stick to it!

Is your account balance like a yo-yo? Does it go into the black, into the red and back again? Well, whip out your calculator! The time has come to make a budget and stick to it. No ifs, ands or buts.

Be realistic

Preparing a budget means making a detailed list, on paper or in a spreadsheet, of all your income and expenses. For it to work, you have to be honest with yourself.

Are you expecting a raise in the next few months? Don’t base your budget on that. Be conservative.

Don’t limit yourself to the last three months because you could overlook some major expenses. Consider all the bills paid over the last year as well as all preauthorized payments from your bank account.

Fluctuating expenses, like utilities, can blow out your budget when you least expect it. Sign up for 12 equal payments, whenever possible.

You can negotiate certain bills (e.g., Internet, phone) to get a better deal. Change provider, if need be.

Consider both fixed AND variable expenses as well as all splurges. It’ll be difficult to stick to your budget if you don’t treat yourself every once in a while.

Consider all potential cost-of-living increases. Things like your Internet package and car insurance could go up.

Be very precise in your estimates.

Create an emergency fund because life is full of surprises.

Stick to it!

Give yourself specific reasons why you have to stick to your budget. Write them down on paper and use it as a reminder.

Update it regularly, every week if necessary, to make sure it is working.

Spend wisely:

  • Before buying something, make sure you really need it. This will be hard at first but it will pay off in the long run.
  • What if you really need it? Ask yourself how often you’ll actually use it. That should determine whether you should buy it or rent it.
  • What if you really, really need it? Go to several stores and suppliers, and check online. Shop around!
  • Ask the salesperson if they know of an upcoming sale. Sometimes they know ahead of time.
  • Avoid signing up for memberships: they’re always exciting at first, but eventually the excitement wears off.

Pay in cash, by cheque or credit card. However, always use your credit card as a last resort – especially if money tends to burn a hole in your pocket.

Even though you made a budget, it doesn’t mean you have to spend every dime. Saying No is always an option – whether to you or others – and having a positive balance at the end of the month is never a bad thing!

Changing lifestyle or consumption habits will help replenish your bank account.

Reducing your grocery bill, even for foodies, is possible:

  • Take the time to consult the flyers before running your errands. Go to where the best weekly sales are and stock up, whenever possible.
  • Do you like red meat? Beef is expensive, so consider broadening your horizons!
  • Are fresh fruit and vegetable prices out of this world? Take a stroll down the frozen food aisle.
  • Cut down on restaurants and frozen dinners. Cook! While you’re at it, make big batches and freeze in individual portions, for a quick meal when you’re on the go.

Your budget is a tool that lets you easily monitor your financial situation and where you need to make changes when you overspend. Don’t see it as a ball and chain – see it as a way to keep a healthy bank account!


Note: This blog post is provided for information purposes only. It is not a substitute for professional legal, financial or fiscal advice. For advice specific to your personal situation, always speak with your advisor. SSQ cannot be held responsible for any decision made as a result of reading this blog post.