If your financial situation has been impacted by COVID-19, a budget can go a long way toward helping you. Creating and maintaining a budget is one of the most important first steps for managing your money.
A budget is a plan that helps you manage your money. It helps you figure out how much money you get, spend and save. Making a budget can help you balance your income with your savings and expenses. It guides your spending to help you reach your financial goals.
Firstly, think about your financial goals and identify your short-term and long-term goals. Then, make saving for those goals part of your budget.
To deal with unexpected situations, create an emergency fund. Your emergency fund should provide you with enough money to cover your living expenses for 3 to 6 months. These amounts can sometimes seem out of reach. That is why you should start by saving a small amount on a regular basis. Having an emergency fund will help you reduce financial stress and avoid getting trapped in a debt cycle.
Secondly, you should understand where your money is going. Tracking your money will help you figure out what comes in and what goes out of your pocket. Every dollar you spend affects your overall budget. For example, if you spend $2.50 a day on coffee, it will cost you more than $900 a year.
Examining the sources of your spending can help you differentiate between the essentials and non-essentials, or the housing and non-housing costs. This way you can try eliminating the non-essential spending moving forward.
If you’re new to budgeting, or just need some help being pushed in the right direction, MonsterMortgage.ca is here to help.
A budget is the foundation of financial wellness, which means to be able to meet your financial needs, feel secure about your future, and make choices that allow you LIVE A MONSTER LIFE.
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