For many of us, making a budget seems like a daunting and stressful task. However, a budget is an essential component of money management and can help you get a handle on your finances and plan for your future. Instead of picturing your personal budget as a scary list of restrictions, imagine it as the path to a happy and well-organized life.

WHAT IS A BUDGET?

A budget records the money you have coming in (income) and the money you plan to spend (expenses). There’s no one-size-fits-all approach to making a budget, but here are some tips to build your own personal budget planner.

Remember that a budget isn’t just a way to track your spending habits. A good budget will also outline your personal financial goals and what steps you need to take to achieve them.

WHY DO YOU NEED A BUDGET?

A budget clearly shows how much you’re earning, how much you should be spending, and what you’re spending your money on.

Your budget can identify areas where you may be overspending or could potentially spend a bit more. This could help you to prioritize between essential and nonessential expenses.

Your personal budget will calculate either a surplus (meaning you have enough income to cover projected expenses) or a deficit (meaning your expenses are greater than your income).

Managing your budget and aiming for a healthy surplus (saving more than you spend) can help you achieve goals big and small-whether you’re saving up for a long-weekend getaway or a down payment on a home.

HOW TO CREATE A BUDGET IN 3 EASY STEPS

1. Calculate your income

Income can come from many sources, such as your regular pay, any side income you have, and any other resources you might receive. Don’t forget to include savings and earnings from any investments. To get an accurate financial picture, make sure you account for every source of income you have—even temporary income or a small sum.

2. Work out your expenses

Start by reviewing your bank and credit card statements, bills, and receipts to work out what you’re spending money on and how much you’re spending.

Your expenses will include things such as:

• Mortgage or rent
• Groceries and dining out
• Utilities such as gas, electricity, internet, phone bills, and water
• Gas and/or vehicle payment
• Medical expenses, such as health insurance or regular medications
• School fees and costs
• Subscriptions
• Gym memberships
• Entertainment

Don’t forget to include expenses you may pay quarterly or yearly, such as home or car insurance, car registration and servicing, and property rates.

3. Set up your budget

An online budgeting tool, such as a Budget Planner calculator, can help you easily build a budget and get a better understanding of your finances. By simply adding your income and expenses, and how frequently you earn or incur them, you can create a view of your total weekly, monthly, and yearly income and expenses.

Once your budget is set up, it’s important to monitor your spending to make sure you’re on track.

Making digital payments and automating many of your regular payments can be helpful when budgeting because you’ll create electronic records of your spending that are easy to track.

REVIEWING YOUR BUDGET

It’s a good idea to review your budget regularly, to make sure it’s still accurate and up-to-date. Any change in circumstances, which leads to a change in your income, expenses, debts, or financial goals, might signal a need to update your budget. You might need to reevaluate your budget if:

• you get a new job or promotion
• you get married or divorced
• you buy a house
• you get a pet
• you have a baby

At WyHy, we are committed to providing you with solid information so you can make wise financial decisions. We care about your and your financial health. If you have any questions about how to better build a budget, feel free to reach out!

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