How to create a budget you can live with: Step 1

Budgeting Step 1

Table of Contents

One of the best tools that anyone can have is a budget.

So many of our clients have never taken the time to create a budget in this article we will walk you through the process step by step and show you how to successfully create one. These are valuable lessons that can be used by everyone who wants to manage their debt and build their financial security.

It starts (like most successful ventures) by closely following a few, simple steps:

Step 1 > Clearly identify your starting financial position

Step 2 > Clearly identify your financial goals

Step 3 > Set up a workable budget to get from where you are to where you want to be

Step 4 > Consistently review once a month to monitor progress and make required changes

To help you in the creation of your budget – we have set up instructions and examples for each of the required steps and we recommend you review each before you begin your budgeting journey.

If you are taking your first steps towards a more financially secure future – hang in there – it might prove challenging, but it is worth the effort!.

Step 1 – Clearly Identify Your Starting Financial Position

This is Step 1 of Budget BasicsLook at any map for directions and you will quickly discover that you need to know where you are now to determine how to get where you want to go. The same is true for building your financial security, yet most people would rather do almost anything than face their finances. This article and the others in this series will help you to take important steps towards successfully managing your finances and get you on the right path.

This process can be a little scary, especially if it is the first time you have done this. Just remember to be as honest and as accurate as you can be. The more accurate you are – the easier it will be to find your way out of debt and on your way to financial security.

In this step, you will be recording your income and expenses. When completed, this document will serve as a handy starting point to achieving your financial goals. If you are part of a family (2 or more people), you most likely will need to fill in all the family details of income and expenses on one worksheet. Whenever possible, we recommend that couples work on their family budget together.

Interactive budgeting worksheet to help you get started:

Download the Expenses & Income worksheet

  1. So let’s get started, download the interactive template worksheet to help you organize and calculate your Expenses and income.
  2. Break your current expenses into three simple categories:
    • income (money coming in);
    • expenses (money going out); and,
    • savings (money set aside for later use).
  3. Gather up all your financial records and have them handy. You may need to organize them somewhat depending on what your record-keeping system is like. Your financial records will include such things as bank statements, bills, income records (ie pay stubs), loan agreements, credit card statements, etc.
  4. Just do your best – if you don’t have all the information you need at your fingertips – make your best guess (you will be updating this information over time so don’t panic.

Break your current expenses into three simple categories:

  1. Fixed Monthly Expenses
  2. Variable Monthly Expenses
  3. Infrequent Expenses

Some of your expenses might not be in the same categories as shown. For example, if you pay your Auto Insurance monthly instead of annually, your Auto Insurance expenses will be a Fixed Monthly Expense rather than an Infrequent Expense. Note: where an average monthly expense is recorded will not change the total average current monthly expenses, so don’t worry too much – just make sure the expense is recorded and included in the total.

Not all of the items listed will apply to your situation – but make sure any expenses that do apply are recorded.

Fixed Monthly Expenses – those ‘same amount’ expenses you see every month – record monthly due date and monthly payment amount for each expense:

Rent / Mortgage – if you have a mortgage, record the total amount of the mortgage and the interest rate you are paying.

Condo fees

Judgments – ie Child Support, Alimony, etc.

Loan Payments – for each loan – write down a description of the loan (ie car), the total amount of the loan, the interest rate being charged, and how long till the loan is paid off.

Credit Card Payments – for each credit card – write down the name of the card, monthly minimum payment (based on your current balance), the total amount owing, and the interest rate being charged. Note we do not normally recommend just paying minimum payments on cards unless it is part of a larger pay-down-the-credit-cards plan.

Other Fixed Monthly Expenses

Variable Monthly Expenses – average monthly costs of those expenses that vary from month to month – include the monthly due date for each expense:

Electricity

Heating – if not electric heat.

Phone

Cable

Food

Child Care

Clothing

Transportation – Auto Gas, Parking, Auto Maintenance (monthly average), Bus Pass/Tickets, etc.

Entertainment – Restaurants/Pubs, Cigarettes, Movies (Rental & Theatre), Sports, Books, Hobbies & Crafts, etc

Other Variable Monthly Expenses

Infrequent Expenses – average monthly costs of those items that normally only occur once or twice a year:

Home Repair

Home/Apartment Insurance

Auto Insurance

Life Insurance

Taxes – Property

Taxes – Income

Holiday Expenses – ie Christmas, Easter, Thanksgiving, etc

Birthdays

Other Infrequent Expenses

Now You Know Where You Are

Now that you have completed recording and calculating your average monthly expenses and income you have a much better idea of where you are in terms of your financial position. If you are like most of us, you had a few surprises during the process. But good or bad, it is always better to know where you stand in terms of your financial position.

Take the Next Step

The next step in our Budget Basics is to Clearly Identify Your Financial Goals (where you want to go). This was the First Step of a four-part series on setting up a workable budget. The entire series can be found here:

Clearly Identify Your Financial Goals – Step 2

Setting Up Your Budget – Step 3

Follow Through or Rinse and Repeat – Step 4

Take Your First Step Towards A Debt Free Life

If you are overwhelmed by debt, call us at 1-844-962-9200 to book a FREE, confidential appointment. We will review your financial situation in detail and discuss all of your options with you. Alternatively, you can fill out the form below and our team will reach out to you. 

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The team at David Sklar and Associates Inc are very professional and are willing to help you get out of debt. Highly recommended.
Melissa MacKenzie
12:35 29 Mar 23
I would like to thank the team at David Sklar and associates inc. for all the time and effort they put in to support this process for me. This topic can be challenging to disclose but a big thank you to Christine for going above and beyond in guiding me through all my options and supporting me through the decisions. I cannot recommend this group enough , as they have shown me compassion , knowledge , and understanding throughout the entire process. I look forward to the next step of this process and learning how the proper way of becoming financially educated through the support of their financial counselling team. For anyone who is struggling , just know that there is a wonderful group of educated professionals at David Sklar who are available to help!
Michelle Plouffe
18:45 14 Mar 23
It took me awhile to get up the courage to contact David Sklar but I’m so glad I did. Trina walked through my options with me and provided the knowledge I needed to make a decision to help turn my financial situation around. She is patient and empathetic and answered any and every question that I had. Trina provided me the reassurance I needed that I was making the best decisions for me and my family. I’m so happy that I reached out and now have a plan to get back on track.
M. Mackenzie
19:59 12 Mar 23
Trina was very helpful and thorough.
Sam M
15:26 12 Mar 23
Christine was very helpful, kind, and understanding. She explained everything thoroughly, answered any questions I had, and was responsive to any concerns I had. 100% would recommend
Katherine Campbell
17:29 08 Mar 23
Jackie Stanley is excellent she took the time to explain everything to me and I am so grateful to her for giving me a fresh financial start so if you have any doubts don’t and go see her if you want to achieve financial freedom!
Heather Helfield
21:24 06 Mar 23
Amazing friendly staff that knows what they are going. They make a difficult situation not so bad. Would give 10 stars if I could.
alie Balan
22:37 25 Feb 23
Very helpful and kind and gave me all the available options before helping me decide which one was best for me. I would definitely recommend Jackie
Alison Rivard
01:01 21 Feb 23
Great experience i was in financial trouble and someone of my friends recommended this company. Cori is a wonderful and welcoming person she did a very good job and came up with a smooth and flexible monthly payment after the reduction. i highly recommend this company. Thank you David sklar and special thanks to Cori.❤️🙏🏻
Jasmine Joseph
22:08 13 Jan 23
Met up with Mr. Jason Sklar to discuss more in person, very thorough and clear. He is very kind and thoughtful, I will be referring anyone with the same situation to David Sklar & Associates.
Ariel Domingo
02:33 29 Dec 22
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