Budgeting/Saving

[AbrhamT2021]

Budgeting Basics​

A budget is a tool that will help you make important spending decisions. If you’re considering ending a financial relationship with your partner, it’s important to review all of your assets to find out if they will support you and your family. When you end a relationship, your income and financial assets may change dramatically. If you take time to determine how much money you need to support your family before you leave, you can prepare in advance to meet your family’s financial needs.
If you don’t have enough money to support your family, or if you have substantial debt, don’t despair! Debt is common and there are many resources to help you manage it.

• List the assets you currently have such as housing, car, and bank account, etc.
• Review all your financial liabilities, . Do you have credit-card debt or do you owe money to family or friends? By understanding how much debt you have, you can better manage your finances.

Whether you’re living with your partner and have never married or are seeking separation or divorce, you may be able to get help resolving your debt, accessing insurance and obtaining other financial support in hopes for financial security.
The definition of financial security varies from person to person. For some, it means having food, shelter and a decent job. For others, it means being able to live where they want, afford childcare and own a car. And for others, financial security is defined by preparing for a comfortable retirement, enjoying vacations, owning a home, and paying for education and training.
Financial security is one of the many reasons why making the decision to end an abusive relationship can be difficult. Most women find that their standard of living declines after ending an abusive relationship and those without employment may have to work to support themselves and their children. This can be overwhelming and frightening.
Regardless of how you define financial security, if you are planning to or have made the decision to leave an abusive partner, having the skills to manage your finances is crucial.

To create a budget, follow these steps:​

Step 1: Identify your net monthly income​

Calculate how much money you receive each month. This is the money that comes into your household, after deducting taxes, pension dues, insurance, etc. Consider all sources of income.

Step 2: Identify your monthly expenses​

Monthly expenses include rent and utilities, as well as those that occur periodically, like car insurance and medical expenses. Don’t overlook any expenses; not all your expenses are paid monthly.

Step 3: Subtract your monthly expenses from your income​

The difference between your income and expenses indicates whether or not you have any money to spare. If you have extra money, you’ll need to decide whether to spend or save it. Can you reduce expenses or earn more money to cover shortages? By distinguishing between needs and wants, you can better identify areas where you might be overspending.
To continue the budgeting process, complete the form on the next step.

Step 4: Assess and rework your budget​

At the end of each month, look over your expenditure to see if they are matching up to your budget. If they are not, determine if you need to work harder to stick to your plan, or if you need to rework your budget to reflect your actual spending.
While identifying your monthly expenses you may realize that there seems to be more money going out than is recorded. That is because every family has spending “leakage” – little expenses that are not accounted for but add up.

TIP: Recording your expenses for two or three month will give you a better estimate of monthly expenses. This is not easy, and there will times when you forget. But knowing how much you need to cover all your expenses is an important step towards your financial safety and independence.

Personal Budget Form​

Living on an income that changes​

When your income changes from month to month, financial planning becomes a bit more challenging. To figure out how much you should count on each month, you could use the following methods of budgeting:

1: Create Two Budgets​

Create a budget that covers your basic needs based on your lowest monthly income. Create a second budget that includes these basic needs plus other monthly and annual expenses such as gifts, entertainments, etc. Use the income that you get in a higher earning month to cover some of these expenses. For example, you could buy an annual pass at a recreation facility during your high earning period so that you can have a chance for recreation during other times.

2: Use Regular income for Regular Expenses​

Another way to do budgeting while living on an irregular income is to split your income into categories: fixed expenses that must get paid each month, and yearly expenses that vary. Use your regular income to pay fixed expenses and use your fluctuating income for the others.
Let’s say, for example that my monthly income sometimes is $1000 and on some month I get $800. The minimum income, which is $800, is the one that you have to use to pay your fixed expenses with. On the month that you have 1000, you have your regular income, $800 plus an extra $200. This extra money is your fluctuating income. On the month that you earn 1000, you could pay the fixed expenses with 800 of that money and use the 200 to pay for the annual recreation pass, gifts or such.

Saving​

Saving should be part of your budget. It is important to put aside some money each month for savings, if possible.
Start by deciding how much you could realistically save each month. Once you determine that amount, pay yourself first. Before you pay bills, set aside money for your savings. Then pay your other bills. If you do not have enough money to cover all the expenses, find ways to reduce spending or increase your income. This may mean you have to work a few extra hours, pack lunch instead of eating out or limit treats for your children.
This may sound difficult, but you will feel good knowing you have money saved for your future. Over time, paying yourself first will get easier, and you’ll wonder why you didn’t do it sooner!

TIP: Find out the interest rate on your credit card; if possible transfer your debt to a line of credit instead. Compare to credit cards, line of credits often charge much lower interest rates.

Work with a support worker or an advocate to develop a plan to access resources in your community. A financial or credit counsellor can help you identify your financial resources and reduce debt. There are organizations that provide free credit counselling. See the resource section of this hand out for more information.
Once you have a clear picture of your liabilities (money you are responsible for paying off), you need to start creating a plan to lower and eliminate them to reach your financial goals. Your plan could be as simple as paying off the credit card debt with the most interest charge first.

Setting Financial Goals​

To manage your money wisely, set financial goals and establish a budget to help you achieve them.
What are your personal financial goals? For example, if you had $1,000, what would you do with it? Buy a new fridge? Set up a savings fund for emergencies? Whatever you have identified, can likely be categorized as a financial goal; therefore, to achieve your financial goals you’ll need to manage your finances and put money aside regularly.

Financial Goals and Emotions​

For many of us, emotions and money are closely tied and spending to fill an emotional need can be a challenge when sticking to a budget. If you are having trouble sticking to your budget, ask yourself the following questions:
Am I shopping to make myself feel better? What emotions am I experiencing and is there another way that I can fill this need?
These are just a couple of examples of how spending can take on an emotional element in your life and how it can pose challenges in regard to keeping a budget.

Strategies for Dealing with Emotions and Money​

Being aware and planning ahead can help you overcome emotions that may cause impulse buying.

Step 1:​

Write goals down and identify how much time and money it will take to get there.

Step 2:​

Keep your written goals handy and remind yourself often of the priorities you have set. This may help keep you on track if your emotions start to take over.

Step 3:​

Identify your feelings and consider if you are being tempted to buy things you don’t need based on emotion. If so, consider an alternative way to meeting your emotional need and remind your self of how you will feel when you are successful in meeting your goals.
As a final tip before making a purchase, research to be sure you are paying a fair price. Don’t overpay because you “fall in love” with something. And don’t spend more than you can afford. If you pay more than you can afford, it will take longer to achieve your financial goals.
If your children are old enough to understand the benefits of spending less today to reach future goals, discuss this with them. Talking about finances and getting them involved in managing money may help you reach your financial goal and benefit your children by helping them learn financial skills early on.
Teaching children how to manage money is a challenge. But if you teach them the difference between “needs” and “wants,” how to budget and how to save, they will know more than many adults. If you don’t teach these important lessons, they will be more likely to join the millions of North Americans who accumulate massive debt.
The best way to teach children about finances is to be a role model. They will pay attention to what you say about money and to how you manage money. Show restraint with money. Let your children see you budget, comparison-shop and make regular contributions to a savings account.

TIP: Treating your self and you children need not be expensive! Here are some inexpensive ways to treat yourself and your children without breaking the bank

Treat Yourself:​

• Give yourself a manicure
• Enjoy your favourite dessert
• Read a good book
• Spend time with a good friend
• Go for a walk

Treat Your Children:​

• Bake them a cake
• Read them a story
• Rent a video or borrow one from the library
• Play their favourite game with them
• Invite their friends for a sleepover

 

[Good-Guy]

It is a really nice article. I also like the things mentioned in the third step. Many people just become too emotional and they tend to buy things that are not really necessary for them. In this article, it has been stated that a counselor could be needed in order to manage expenses and create a budget. However, most of the time, a counselor could do nothing until or unless the person who is seeking counseling actually makes a plan and uses his or her willpower to save money.

 

[sincerem]

Savings goes together with budget. You've said tremendously through the information you've taking your time to draft here which is based on savings/budget.

When the income is lower than expected, it is believed that budget will be low to accommodate the expenses and savings. When some one is working in a job where income isn't static it makes the budget move up and down without being set static too. Because, income can move up and down due to the nature of the job especially here online, where the jobs are done remotely and sometimes their is scarcity of the jobs.

 

[benlouie]

Thanks for sharing the article. The tips in the article might be helpful in next budgeting.

 

[ananbob92]

Annual budget is best for family matters

 

[Caramelle]

These are very good tips for making a budget and sticking to it. I like the idea of paying yourself first. Before we pay our billers and suppliers, we should pay ourselves in the form of savings. This is another way of saying that we should prioritize our savings and only use what's left for our expenses. When the leftover cash is insufficient to cover our expenses, then we have to either trim the expenses down or find sources of income to make up for the deficit. In order for this to work, we must have a realistic budget that will list down our sources of income and monthly expenditures. I would further break the expenses down into categories to be truly helpful in identifying items that we absolutely need to pay, those that we can do away with, and those that we can remove. It takes discipline and extra effort in the beginning, but when we realize that this will help us become financially free and stable, then it is all worth it.​