It’s important to assess the pace at which you spend and identify the areas where you could be saving for future projects you really care about.
Do you really know where your paycheque is going?
If you skip the monthly budget step, you’re probably either lazy or simply not ready to face reality and take a hard look at your spending habits. There’s no miracle solution, only you can draw up your own budget. This is something even your financial advisor can’t do for you.
1. Draw up a budget
A budget is simply a detailed estimate of expenses in comparison to monthly income.
List your income and expenses
- Print out your monthly account statements from the last 12 months (available on AccèsD Internet) or request them from your caisse. You’ll need the information they contain about your expenses, the bills you’ve paid and the cheques you’ve written.
- Pull out all of your receipts. They’ll allow you to determine how much you’ve spent on purchases over the last few months.
Enter the information gathered into Your budget spreadsheet
Find out more
For more information about the statements available to members on AccèsD Internet, see Monthly statements of account.
2. Compare your budget with your real expenses
- If your income is greater than your expenses, consider saving or investing the monthly surplus towards your goals.
See Save for future projects
- If your expenses are greater than your income, you are in debt. It’s time to think about ways to reduce your expenses or increase your income to rectify the situation.
See Pay off your debts
Did you know?
Having several accounts in the same financial institution can help you track your income and expenses more effectively. Some people have as many as 5 accounts (one for monthly bills and expenses, another for annual bills, a third for medium-term savings, etc.).
Find out how to open and account and become a member.
If your expenses are greater than your income
You’ll need to find money to at least bring your expenses in line with your income. Here are a few possible solutions:
Cut out everything that isn’t a necessity. Ask yourself these questions: Do we really need a second car? Can I cut back on fixed expenses, such as cable, cell phone, phone bills? Would I be willing to quit smoking or cut out coffee to save money?
Simply put, get rid of everything you can’t afford. And if that isn’t enough, you’ll have to find a way to earn more money (ask for a raise, get a second or better paying job, etc.).
Save on banking fees and charges.
See How to reduce your service charges.
Put money aside by regular instalments. This is a very effective way to save. You can accumulate capital gradually and without having to make deposits in person.
3. Create an emergency fund
This fund, to be used only in case of emergency (e.g., your refrigerator dies, your car needs unexpected repairs), will help you avoid falling back into the credit trap. And when your emergency fund is empty, it’s important to start building it back right away.
Find out more about emergency funds.
Can’t stay on budget?
You say you’re not the type to budget? You don’t have enough discipline? See Why some budgets don’t work