How much money is coming in?
Add up all the regular sources of income you have: work paystubs, government cheques, child benefit or GST cheques, pension etc. If you have irregular income, figure out how much you receive over a 3-6 month period and then take the average of those months. This number is the income you have to live within.
What do your expenses look like?
How much money do you spend on a monthly basis on rent or mortgage, utilities, food, gas and insurances, and personal spending? If you aren’t sure, every bank and credit card company has an online function where you can download your bank statements or credit card statements into a spreadsheet. Use this spreadsheet to organize all of your expenses into categories. The more detailed your expense categories, the more clarity you will have about where the money goes and whether you are happy with spending the money that way.
Once you have figured out where your money is going, look closely to see what you want to change.
Use the financial info in your downloaded spreadsheet. Are there any areas that are surprising to you? Are there specific areas that need improvement?
Does your income cover your expenses?
If your monthly income isn’t enough to cover your expenses, you need to either bring in more money, by getting a second job or finding contract work, or trim your expenses so that your income and spending balances.
Highlight any expenses in your spending plan that are a priority.
Those become the foundation for your spending plan. Identify areas where you are spending money that is frivolous or unnecessary, set spending limits and develop strategies to reduce your spending in those areas. Sometimes hard choices need to be made, like moving, selling a vehicle or getting a roommate.
Use the new year to create small changes in your financial habits, take steps to figure out your financial weaknesses and develop strategies to overcome impulsive spending. Base your spending on your values, what is important to you and your family and become more conscious about directing the money in ways that are satisfying.