Here at Evermore, we’re always looking for ways to help you keep saving and investing top of mind, and what better way to do that than by creating a household budget? Household budgets help keep you on track and allow you to maximize your hard-earned money. Not only can they benefit the current you, but they’ll also benefit the future you, especially regarding your retirement.
In honour of Financial Literacy Month, we’re diving into the world of household budgeting - keep on reading to learn how you can get started today!
Why is tracking my budget important?
Making and sticking to a budget is a pivotal part of laying your financial foundation, especially if you’re new to saving and investing. Whether fresh out of post-secondary, entering the workforce, recently moving up in your career, getting ready to retire, or already retired, thinking about investing, saving, and creating healthy financial habits is always important.
That’s why assessing your finances by creating a budget is essential. Not only can it teach you healthy spending habits, but it can also help you achieve your goal of reaching financial freedom.
It keeps you on top of your bills
If you’re like us, you’re probably a massive fan of online and automatic bill payments. But one thing tracking your budget in real-time can do, is help you see what money is going where, especially when it comes to recurring monthly bills such as wifi, home security, or electricity. In addition, seeing your monthly bills in one place can put into perspective what services you can go without, such as streaming services, meal kits, and subscription boxes.
It helps you save for small and large goals
Budgeting your money helps when it comes to saving, no matter how big or small your goals are! Whether you’re looking to purchase a new smartphone or finance a new vehicle, having a solid grasp on what you can and can’t easily save for will help you in the long run.
One form of investing and saving we love here at Evermore is goal-based investing. To have a successful investing outcome, you must ensure that your goals are realistic and aligned with your current finances.
It makes budgeting for retirement easier
Last but certainly not least, tracking your budget makes saving for retirement all that much easier! Although it’s essential to keep your monthly bills and overall spending in check, integrating investment contributions into your monthly budget allows you to see precisely what you can contribute.
How do I get started tracking my household budget?
Getting started with your household budget is relatively easy, but it takes a bit of time to gather all your information in one place takes a bit of time. You’ll need to review your current income, what recurring bills and one-off purchases you made recently, and your general spending habits for the past three months. Here’s a quick list of the steps you’ll need to complete:
Create a budget template
When it comes to creating your budget template, it doesn’t have to be anything fancy - pen and paper work just fine if that’s what you are comfortable with, but using a free spreadsheet program like Google Sheets allows you to keep everything organized in one place. If you’re working on a dual-income household budget, a spreadsheet might be a bit easier. There are also several mobile and web apps, some of which are free, where you can build budgets, track your spending, and even automatically connect with your bank accounts and credit cards.
Great news! Evermore has created a free template for you to use. This free template also includes a household balance sheet. Check out our blog article here to learn more about tracking your household balance sheet. Your household balance sheet and budget work hand-in-hand.
Once you click on the link, you can make a copy to edit in your own Google account, or you can download it as an Excel file if you prefer.
The budget template allows you to list your budget at the beginning of the month, then track your actual inflows and outflows throughout the month. With each month that you budget and track your spending and saving, you will get better at budgeting, and you will start to get excited about your progress with paying off debt, saving, and investing.
List your income
To get started, we suggest reviewing your monthly income and including any future bonuses or extra income you may receive in the next couple of months, like commission bonuses or holiday bonuses.
Add up your expenses
Next, you’ll review your expenses like rent, mortgage, car insurance and leasing, and your monthly grocery bill averages. You should also include any current extra spending you’re doing, whether dining out or attending events like weddings or weekend getaways.
Review your savings goals and adjust as needed
Now, it’s time to review your savings goals. Do you want to pay off your credit card debt? Are you planning to buy a new car? Are you looking to make a down payment on a condo? Your goals are endless, and they’ll look different for everyone! With your brand household budget, you can now reassess where you’d like to start when it comes to investing and saving.
What’s next in my personal finance journey?
Once your budget allows for savings and investing, you might wonder what to do with the funds you put away in your savings and investment accounts.
Well, you are saving and investing for a reason (probably several reasons)! Your own personal and family goals should drive your financial decisions. This approach is called “goal-based investing.” Read our blog article “What is Goal-Based Investing?” to learn how the timing of our goals is the first step in determining what to do with your savings.
We at Evermore focus on helping working-age Canadians reach their retirement goals. Click here to learn more about how the Evermore Retirement ETFs are an easy, sensible, and low-fee for retirement investing in your RRSP and TFSA.
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