If you notice that your expenses are higher than your income, you’ll need to make some adjustments, such as focusing on which debt to pay or earn extra money (more on that in step 3). Along with your expenses, make sure to include any debt payments you will make. Then, allocate set amounts of your income to cover those expenses, including how much you pay for various bills and items each month. Using the Credit Canada planner or any other budgeting tool you prefer, create a list of your income and expenses. You can also include your budget and see how it compares to your actual spending. It provides a complete breakdown of what you spend your money on each month. ![]() ![]() With this tool, you plug in some basic information, including your expenses, and the planner does the rest. There are many online budgeting tools and financial apps that can help with this, including Credit Canada’s free Budget Planner + Expense Tracker. The first step to creating a monthly budget is understanding how you manage your money from day to day. Step 1: List your expenses and streams of income Alternatively, you could look into taking on a side hustle.Compare the best savings accounts in Canada You could talk with your employer about a raise or advancement opportunities that could result in higher pay. While this is easier said than done, there are a few potential ways to increase your monthly income. Increase income: You can save more if you're earning more.For example, could you reduce your housing costs, grocery bills, entertainment spending, subscriptions or car payment? Take a close look at what you spend each month and see if there's anything you can cut out or reduce. Reduce expenses: Another way to boost your savings is to audit your monthly expenses.Walsh also suggests setting up automatic future increases to your 401(k) and joining "roundup programs," in which your bank sends leftover change from checking account transactions to your savings account. For example, you can set up an automatic transfer so a portion of each paycheck is automatically sent to your savings. Instead, develop a system that automates your finances so you can make a good decision once and reap the rewards in the future," Walsh says. Automate savings transfers: "Relying on willpower or discipline to improve your finances typically doesn't work.Rinse and repeat: Review your plan, make adjustments as needed and set another best action for 30/60/90 days.Focus on that action for the next 30/60/90 days: Once you understand your next best action, focus on that for the next 30/60/90 days.Maybe you need to pay an extra $200 per month to repay your credit card in the desired timeline, save an extra $300 per month to retire how you want or save an extra $150 a month to build your emergency fund. Identify your next best action: Calculate the best use of your next dollar.Then, figure out if you're in a good, OK or bad spot regarding each goal. Plot your course: Make a plan to get from point A to point B.A short-term goal might be creating an emergency fund, a mid-term goal might be buying a home and a long-term goal might be saving for retirement. Identify your goals, concerns and preferences: Set short-, mid- and long-term savings goals and prioritize them.Understand what you own, owe and spend: Take note of all your assets (checkings and savings accounts, investment accounts, retirement plans, real estate, etc.), your liabilities (student loans, credit cards, personal loans, mortgages, etc.) and your cash inflows.
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