When it comes to debt solutions and building up your credit score, there are many things to consider. You can consider getting a debt consolidation, doing a balance transfer, or filing a consumer proposal. Whatever course of action you take, there is one thing that you cannot go without: and that’s creating a budget. After all, you can’t expect to rid yourself of all your debts without following a budget — you’d lose track of all your money.
Budgeting not only helps you get our of debt, but it can also help you avoid being in debt. But if you’re new at it, it can seem a little complicated. That’s why below, you’ll find tips on how to create the best budget so that you never have to worry about your finances again!
Draw up a list of all your income
It’s important to track how much money you have coming into your back account, and that doesn’t necessarily only mean the money you have coming in from your job. You might have a solidarity tax credit coming in every three months, other assistance payments from the government, or you might even have a side hustle that bring you money here and there. It’s important that you tally everything up to know exactly how much money you have each month. It is only once you track all of your sources of income that you can begin step 2.
Draw up a list of all your expenses
Just like drawing up a list of all your sources of income, it’s important to note how much is leaving your bank account each month. There are three types of expenses that you have to keep track of.
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The first is fixed expenses. These are the expenses that, just as their name suggests, do not change. They come once a month and never come as a surprise. Fixed expenses include things like rent, credit card payments, car payments, your cellphone bill, your internet bill, etc.
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The second is periodic expenses. Periodic expenses are the ones that usually show up once per year. If you are extra careful, you’ll be able to plan for them, but they are much more difficult to account for. These include things like holiday spending, vehicle registration, house or vehicle repairs, tuition, or travel expenses.
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The last is variable expenses. Variable expenses occur every month, but like their name suggests, the amount you have to pay varies from month to month. These include things like groceries, outings, gas, etc.
Although some of these expenses might be difficult to account for, where there’s a will, there’s a way. Just check last year’s bank statements and do the tally. This will also allow you to see which months you can expect to see money leaving your account more frequently.
Draw up a budget and adjust
Once you list all of your income and expenses, you’ll be able to see just how much money you’ll have left over each month. If you notice that your expenses exceed your income, then you should think of making some adjustments. Try to determine whether or not you can lower the cost of some of your expenses such as your phone bill, internet bill, or your entertainment expenses.
Use an online tool
If you really don’t feel like there are any expense you can cut, you’re getting bogged down by how much your debt is increasing, and you just don’t know what else you can do, use Allevia's online tool that can analyze your personal situation and determine the best course of action for you. Not only will it help you reach your goals faster, but the best part is that you won’t even have to meet anyone in person while you get the solution that’s perfectly tailored to your needs and financial objectives!
