Life Budgeting
Building and Following

More in depth budgeting (or, as I like to call it, life budgeting) requires more thought. List all your income sources at the top. List your employment income and any extra income you receive. Do you receive GST benefits? Do you sell items on eBay? List ALL sources of income. Then list all you expenditures: groceries, rent/mortgage, bills, clothing, specialty coffee, etc. List ALL expenditures. I want to point out that I know I sound like a broken record! ;-) But it’s funny how some people don’t see expenditures as expenditures. That $5.00 gossip magazine you just purchased while in line at Safeway buying milk is expenditure. For that matter, so is the milk. So list everything!

Now to create a realistic budget, you must include not just things for the ‘right now’, but also those items that may/will crop up, such as your summer vacation, or your vehicle’s vacation. I suggest you sit down and think about this thoroughly. How much will your summer vacation cost? Where are you going? What will you be doing? Let’s say its October and you want to take your vacation in July of next year. You’re planning on visiting your family back East. There are four of you in the family, so you will need four airline tickets. That’s about $4000. Will you be using a rental vehicle? The rental fee for a mid-sized vehicle for a week is about $300. What about meals and such? If you’re like my husband, you won’t worry about this. Instead you’ll just assume your family will feed you. Don’t assume; plan for at least a portion of the meals coming from your pocket. Also, where are you staying? Again, hubby would say, ‘we’ll stay at mom and dad’s house, of course!’ Well sure. I’ll give you that. But it’s also not a bad idea to plan for one night’s accommodations. You never know, you my be completely sick of mommy-in-law by week’s end and feel the need to ‘escape’ early. ;-)

So all in all, we’re looking at about $5000. Now wouldn’t it be nicer to plan in advance for this vacation? It’s October right now, and your vacation will be taking place in July of next year, so lets count on nine months of saving (we’re not counting July, because that’s vacation month). $5000 divided by 9 months is $555.00 per month. GACK! That’s a lot of money isn’t? Ok. Maybe try saving 10% of your income toward vacationing. Or maybe try saving for half the expense. Half of $5000 is $2500, so that would make $278 per month – is that doable? Save what you can. But do save, because if it’s not doable now, how are you expecting to afford it come July? Credit cards? I say a big fat ‘NO!’ to that idea!

Vacationing on credit is like Christmasing on credit. ‘What is it?’ you ask. Just plain old silly! It’s not necessary. It’s so much easier to save than to pay for something for years and years to come!

So that’s your vacation account. Now what about your car maintenance account? Your home improvement account? These accounts and others are personal. YOU need to decide what accounts to set up and how much to put into them every month. I’ve listed examples of accounts further below.

For these separate accounts I suggest Internet banks such as ING that have no fees, and are so convenient. Your do all of your banking online! No need to ever step foot inside a bank. Not only that, but they normally pay higher rates of interest.

How To Follow A Budget

The first rule in following a budget is realizing it is only a plan, a map. Most of the time you can stick to it, but sometimes you have to veer off – and that’s OK! Yes, you read right. It’s ok. Life doesn’t always go to plan. Sometimes, even though you have regularly brought your vehicle in for its tune up after the allotted kilometer, it still conks out on you. It sucks. But it happens. So don’t sweat it…at least not too much. ;-)

If you have set up a realistic budget it should not be that difficult to find the money to solve the problem. By realistic I mean, you have moved on from the basic budget and it has bloomed into a life budget that covers (almost) everything. From emergencies to special occasions, from the transmission in your 1982 Toyota going bye-bye to your craving for mint chocolate chip ice cream, from big to small, you should have (almost) covered it all!

Examples of categories that would be in a realistic life budget follow:

Income
Employment Income
Any Other Sources of Income
TOTAL

Expenses
Mortgage/Rent
Groceries
Heat
Electricity
Telephone
Cable
Internet
Water
Sewer/Garbage Collection
Life Insurance
RRSP
RESP
Car Payment
Car Insurance
Car Maintenance
Household Maintenance/Improvements
House Insurance
Family Vacation
Special Occasions
Clothing
Charity Donations/Tithing
Emergency Fund
Job Loss Fund
Savings
Any Other Expenses
TOTAL

Income-Expenses=Extra (hopefully)

Following a budget is not difficult in theory, but it can be difficult in practice. Some times, as the saying goes, you rob from Peter to pay Paul. But that is ok, as long as you don’t go over budget. And if you do have to go over budget, be sure to get back on track as soon as possible.

For example, let’s say for the last 6 months you have been allotting $15.00 per week to your Family Vacation account, that’s $360 – congrats! You’ve also been placing $50.00 per month into the Car Maintenance account, that total is now $300. Unfortunately, the family station wagon has decided to go on a vacation of its own. Five hundred dollars later and a trip to the ‘AutoSpa’, Ms. Wagon is feeling much better about herself and the world. Good. But you had to rob $200 from the vacation account to cover the short fall of the car account. So now you have $0 in the Car Maintenance account and only $160 in the Family Vacation account. These amounts have to be rebuilt and slowly but surely you’ll get back up to the previous amounts as well as surpass them. Keep on keepin’ on!

Notice, you didn’t go over budget. Yes, you had to take from somewhere else, but it’s not the end of the world, it’s the beginning of something grand! The something is what I like to call ‘With Money’. You may not be rich, but you should never have to ‘scamble’ again. You should always have a ‘cushion’ to fall back on. Ahhh! Fells great doesn’t it?

By budgeting you are placing value on your money. You're putting it toward something, and by doing this you’re not spending it willy-nilly just because its there – you’re saving it! This allows you freedom to move comfortably through life without ever wondering ‘Will I have enough?’ The answer to that question can now be ‘yes!’