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November 22, 2018 | By: Karina Arancibia

Why You Need to Be Using a Personal Budget Planner

Budgeting | Budget Planner

Mention the dreaded B-word to the wrong person—budgeting, that is—and they'll turn tail and run for the hills. So what is it about budgeting that causes such a visceral reaction in some people? There might actually be a few factors at play. For starters, if you're not an overly organized, Type-A personality, budgeting can seem complicated and intimidating. Secondly, there’s the notion that living on a budget means cutting out everything you enjoy. The fact is, neither of these is true.

5 Ways a Budget Planner Helps

1. You Know Where Your Money Goes

How many times have you gotten to the end of the month only to find yourself out of money, or worse, behind and maybe even considering a payday loan? With a budget, you get a clear view of what’s coming in and what’s going out—before it actually goes out—which can help you better plan your spending throughout the month and/or make decisions on where to cut back, so you’re not scrambling at the end of the month trying to make ends meet, and forced to live paycheque to paycheque.

2. You See Where to Cut Back—And Ways to Save

When you see some of the ways your money is being spent, it can inspire you to make changes that result in real money-saving opportunities. For example:

  • If you bought a pack of cigarettes a day at $11 a pack, that works out to $330 a month you could be putting towards a financial goal that's actually important to you, like a down payment on a home, paying down your debt (and thus saving tons of cash in interest) or saving up for that vacation you've been talking about for the last two years.

  • If you purchase a premium beverage at Starbucks every day during the week (Monday to Friday) at around $4 a pop, that works out to $80 a month on lattes, cappuccinos and whatever other designer drink your heart desires. And that's just once a day—if you're indulging in this guilty pleasure twice or even three times daily, you can easily be spending over $100 a month...on coffee!  

  • And if you are anything like the average Canadian, you're set to spend $1,500 this year on holiday spending.

These scenarios and others really come to light when you see it on paper (our Budget Calculator can be a real eye-opener), which can help you consider cutting back on unnecessary spending, like cigarettes and coffee. Can you cut back, or better yet, quit smoking? How about brew your own coffee at home and bring it with you? And what about holiday spending? Are there some adjustments you can make that will help you save and keep holiday costs down to a minimum? Christmas will still be in December next year, so you can start planning ahead and squirrel money away in advance with the help of a budget planner, too.

3. It Helps You Build an Emergency Fund or Invest

A car breakdown, a vet bill, a trip to the dentist, a job loss...the unexpected happens, and it’s best to be prepared for it without having to reach for a credit card that will rack up interest fees. With a budget, you can get an idea of how much money you can set aside each month to put towards an emergency fund. But don’t confuse this with savings; savings are for short-term goals, like a vacation. An emergency fund is not to be touched unless there is a true emergency (and it’s recommended that you save up 3-6 months' worth of your salary for this fund). Only then, and after debts are paid in full, should you consider investing.

4. It Promotes Communication and Teamwork

This may or may not apply to you, but if you share money and expenses with a spouse or partner, arguments over finances can be common. It’s not unusual for one partner to cover, say, the utilities or auto loan, while the other covers the mortgage or rent—and then conflict arises over who is actually doling out more each month. With a budget, both parties gain a bird’s eye view of expenses, so conflicts can be easily resolved and both parties can begin to work as one.

5. It Helps You Pay Down Debt Faster

Often, people hesitate to pay more than just the minimum payment on their credit card and other debts for fear of running out of money by the end of the month. But making minimum-payments-only doesn’t make much of a dent in the actual debt; it usually just covers the interest and maybe a bit of the principal, making it seem like you’re getting nowhere. A budget lets you see exactly how much money you should have left over, given no emergencies, so you can put more towards those debts and begin knocking them down. 

Don’t let your money control you—take control of your money! It's meant to be a tool, not a burden, so take back control. A budget planner can help you do just that.

And because we know it can be difficult to get started, we created an online budget planner that breaks out various monthly expenses within different categories, such as housing, living, work, and personal. All you need to do is plug in your monthly income and expenses in each section, and the planner tallies up a summary to provide you with your monthly surplus or deficit. Get started now, and if you find yourself in a financial hole that you don’t think you can get out of on your own, help is just a phone call away. You can speak with a credit counsellor about your budget or any other financial questions you have, for free and in confidence. Just call 1.800.267.2272 to book a free counselling session.




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