The 11 Best Budgeting Tips for Taking Control of Your Finances

Budgeting is the main pillar of financial management. Most people avoid doing it because they think it will limit their freedom to buy the things they want. In actuality, the best budgeting tips put you back in charge of your finances.

Instead of being at the mercy of crafty marketers that tempt you to buy things you don’t need, you can decide beforehand where to spend your money. A budget directs where your money goes so that you can achieve your financial goals. It makes your spending intentional rather than impulsive.

Without a budget, you can end up with debt and a house full of things you don’t use. A recent survey found that 73% of Canadians have outstanding debt and at least one-third of them feel overwhelmed by it. Budgeting could have saved many of them from debt. In fact, it may be the key to solving their financial woes.

A realistic budget can result in paying off debt, checking items off your bucket list and even retiring early. Does this convince you to get serious about budgeting? Then keep reading for 11 of the budget tips you should use to take control of your finances.


1. Write Down Your Financial Goals

One of the best budgeting tips is to start by clarifying your reason for budgeting. If you start budgeting because everyone says you should do it, you might not stick to it.

Instead, think about your current financial situation. What do you hate about your finances? For instance, do you hate having crippling debt?

Then one of your financial goals should be to pay off your debt. Having that goal will give you the motivation to follow all the budgeting tips given below.

Remember to choose goals that are realistic and relevant to you and your family. Avoid keeping up with the Joneses. Comparison is the fast track to financial misery.


2. Track Your Earning and Spending

Before you can create a budget, you must know how much you currently earn and spend. Track all your income and expenses for a month. This way you can have a realistic idea of your finances. Use this data as the starting point for your budget.

There are several tools you can use to track your money. It’s best to choose a tool that you will use. Whether it’s pen and paper, a spreadsheet or a money tracking app. Continue tracking your finances even after you have a working budget.

Tracking keeps you focused on and accountable for your goals. You’ll get a monthly view of what you’re doing wrong so that you can course correct. You’ll also see what budgeting strategies work for you so that you can make them permanent habits.


3. Create a Realistic Budget

Once you know how much you earn and what your monthly expenses are, you can create your starter budget. Always pay yourself first by allocating at least 10% of your income to a secure savings account. Next, allocate funds to pay for your big four expenses (food, utilities, shelter and transportation).

If you have a lot of debt then you should pay at least the minimum monthly amounts on each debt. If you have surplus funds you should use them to pay off your debt. Do this as fast as possible starting with the smallest one and working your way up.

You should also focus on saving money for one if you don’t have an emergency fund. These are the funds you’ll use in case you suddenly lose your source of income or you face a major emergency. Once you have covered all the important expenses you can budget some funds for clothing, entertainment and taking vacations.


4. Budget to Zero

This is one of the best budgeting methods as it helps you account for every cent of your money. This budget requires that your income minus your expenses amount to zero.

Start by writing and adding up all your income. Then do the same for your expenses. Subtract your income from your expenses and see what figure comes up.

If you have surplus funds, you should direct them towards paying down your debt or to your savings and investments accounts. Any extra money that doesn’t get assigned to a task will end up getting wasted. This is why every single cent must go somewhere.

If your expenses exceed your income, then you must find ways to reduce your spending or increase your income.


5. Involve Your Partner and Children

If you have a spouse or partner, make sure to involve them in the budget planning. Consider each person’s dreams when setting your financial goals. This ensures you are both motivated to achieve your targets.

Your budget will fail if you create it by yourself as your partner also contributes to your family’s finances. They may rebel and spend on the things they desire or refuse to help increase the household income.

Make budgeting a fun family project that you do every month. You can all review the previous month and identify any wins or areas for improvement. The whole family will become motivated to continue budgeting once you start hitting your set goals.


6. Cut Down on Non-Essential Spending

If your expenses are more than your earnings, find ways to reduce them. For instance, you can cancel streaming or cable services. Also try things like buying cheaper food, moving to cheaper accommodations or taking public transport.

If you overspend on things like groceries and entertainment, consider switching to cash and the envelope system. Withdraw the total cash budgeted for these categories and put them in an envelope─ one for each category. Once the money in the envelope runs out you aren’t allowed to spend any more on that category.


7. Increase Your Earnings

Consider increasing your earnings if you are finding it hard to make ends meet or to reach your financial goals. The easiest way to do this is to get a second job, start a side hustle or join the gig economy.


8. Have a Miscellaneous Bucket

Budget a small amount of money that you can use to pay for unexpected expenses that come up during the month. This will be your “miscellaneous” category. If the unbudgeted expenses keep recurring, you can create a new budget category for them.

If at the end of the month you have funds leftover in the miscellaneous bucket, direct them towards your most urgent financial goal. But if you always have money left over consider reducing the amount you allocate to this buffer fund.

Direct the extra money towards another expense such as savings or paying off debt.


9. Adjust Your Budget Each Month

Some expenses will remain the same every month. But others will change. Smart budgeting requires that you adjust your budget each month depending on your circumstances.

Once you have budgeted for a year or more, you’ll know how to adjust your monthly budgets as you know what your seasonal income and expenses are. But even beginners can adjust their budget for each month based on what they expect to happen.


10. Track Your Progress and Reward Yourself

You need to know whether your budget is working. The only way to do so is to check your results each month.

Are you sticking to the budget each month? Are you reaching your financial goals? Is your financial situation improving?

Are there any changes you need to make to your budget? These are good questions to ask yourself at the end of each month. Whenever you reach important milestones, make sure you celebrate your achievements and give yourself a (budgeted) reward.


11. Make a Budget for Inconsistent Income

Budgeting may be harder if you don’t have a regular paycheck. But it isn’t impossible. The best thing to do is to create a budget based on your lowest earning month. Then list all your expenses in order of priority, starting with the big four necessities.

If you earn more than you budgeted for you can direct the extra funds towards a savings account. This can cover budget shortfalls on months that you earn your savings. Once you have a sufficient emergency fund, use extra funds to pay down debt or on any other financial goal you may have.


Use the Best Budgeting Tips to Take Control of Your Finances

The secret to budgeting is the realization that it isn’t a restrictive practice. But a magical way to achieve financial freedom. Once you release your resistance to the process, it’ll be easy to follow our best budgeting tips.

You must record all your earnings and spending and review your budgets at the end of each month. The first few months of budgeting will need all your willpower. But 3 or 4 months of sticking to a budget will convert you into a money management genius.

When you start hitting your financial goals you won’t want to stop the practice. If you’re looking for some help with your finances, check out how you can receive a small online loan in no time.

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Get your online loan, paperless & fast.

Quick Personal Loans for Canadians :

  • No credit investigation
  • No documents required
  • Repay in up to 90 to 120 days
  • $500 short-term loans