Wednesday, January 8, 2020
A budget is the foundation of financial well-being. And with good reason. It’s a simple but highly effective way to make sure you live within your means, and it allows you to have control over your finances.
Research backs this up. The Financial Consumer Agency of Canada has found that when people start using a budget, they make better financial decisions and improve their financial well-being. They are better at keeping up with their financial commitments and reducing their spending when money is tight.
Today, only about half of Canadians report having some type of a budget. Some use traditional methods, such as handwritten lists, or even savings jars and cash envelopes. Others use digital tools such as spreadsheets, mobile apps or financial software.
Whichever method you use, a good budget must clearly show your sources of income and monthly expenses. This will help you achieve your financial goals, including finding ways to get rid of your debt and saving more money for things that are important to you, such as retirement or your kids’ education.
A budget is especially important if you have trouble paying your bills and do not know where your money is going every month.
If you don’t know where to start, there are plenty of free online tools to help you get your finances under control, including a new budget planner from FCAC.
This interactive tool has many features to help you better identify your priorities, needs versus wants and how to save money. It also lets you compare your spending habits with other Canadians in similar life situations. You can save and update your budget online at anytime, or simply download an interactive spreadsheet.
Fair warning: this can be a sobering exercise, especially when you are face-to-face with how much you spend at the local coffee shop every week. But the time and effort that goes into making a budget is well worth it.
With a good budget in hand, you will not only find yourself doing a better job of taking charge of your finances, but you’ll also be closer to achieving your life goals and dreams. (NC)