Is your 2022 New Year’s resolution to take control of your personal finances? Now more than ever, there has never been a more opportune time to learn how to budget.
Budgeting allows you to be more independent, plan for the future, and grow more financially secure.
iCASH, an online alternative to traditional payday loans, offers these five easy steps to creating a monthly budget that will put you on the right financial track, no matter your income:
Step 1: Know your net income
Determine exactly how much money you make every month, also known as your net income. This amount comprises how much money you take home after taxes, and other payments are deducted from your paycheck, so you have an accurate number to include in your budget.
Step 2: Track your monthly expenses
Do you know where all your money goes? Take the time to track your monthly expenses by listing everything you spend money on, both big and small. These costs could include your daily coffee, gas, parking, phone bill and more. Everything goes on the list.
Step 3: Categorize your expenses
Now that you have a better idea of your spending, divide them into two categories.
Your fixed expenses, such as rent or car payments, remain the same every month. Variable costs differ based on usage. These could include entertainment expenses or food costs.
Dividing your costs allows you to better focus your efforts. While there isn’t much you can do about fixed expenses, you can look at your variable expenses to see if there’s an opportunity for increased savings.
Step 4: Calculate the difference between income and expenses
Subtract your total expenses from your net income and see how much you have left.
The remaining amount will represent your monthly savings and money you can put toward paying off debt. If you’re spending more than you earn, it’s time to look at those variable expenses and determine what can be cut back.
Step 5: Review and evaluate your budget
You’ll know if your budgeting strategy was successful if you reached your savings goal and stopped taking on extra debt. If not, take another look at your spending habits and determine how you can do better with your budgeting plan.
If you're in need of some extra cash, an online short term loan can be the perfect solution. Visit icash.ca to learn more.