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How To Create or Update Your Personal Budget

Posted On: 18.01.10

How To Create or Update Your Personal Budget


It's that time again! The start of a new year is when many people set goals in the hope of improving their financial health. One way to better your financial future is to create a personal budget. It can help you feel more in control of your finances and help you save money for your goals. If you already have a personal budget it may be time to update it. Here are simple tips to get you started.


1. Summarize Your Net Income 

The first step in creating or updating your budget is to record all of your after tax sources of income. If you receive a regular paycheque where taxes are automatically deducted, use the net income (or take home pay). If you are self-employed or have any outside sources of income (investments accounts, stocks, bonds, rental income, etc.), make sure to subtract all deductions so you are recording the net amount. Record this as a monthly amount... this is your monthly income. 


2. Summarize Your Spending

List all of your fixed expenses (essential lifestyle costs that stay relatively the same each month). These include regular monthly bills such as rent or mortgage, utility bills, loans, vehicle payments, etc. Next, list all your variable expenses (costs that can change from month to month) such as food, clothing, entertainment, gifts and travel. If you use credit cards, this is a good place to check since expenses are categorized monthly. The key to creating an effective budget is to identify a monthly average. The more detail you can record the better. This category will be important should you need to make adjustments to your budget. These costs, both fixed and variable, are your monthly expenses. Keep in mind that these costs can change, that's why it's so important to update your budget on a regular basis.


Note: Don't forget to include your savings goals (ideally a fixed expense). An effective budget must cover all of your needs, some of your wants and savings for emergencies and the future.


3. Total your monthly income and monthly expenses

Ideally, your monthly income should be higher than your expenses. This means all of your income is accounted for (budgeted for a specific expense and savings goal). If you are showing higher expenses than income, changes will need to be made. Review your expenses to find areas to cut. Variable expenses or "want-to-have" expenses, are the first place to look. Since these expenses are typically non-essential, their probably easier to cut, bringing you closer to your income. 


4. It's important to review your budget on a regular basis so you stay on track

After the first month of creating or updating your budget, take a moment to tally up and compare your actual expenses versus what you created in the budget. This will show you where you did well... and where you may need to improve. Remember, your budget is not set in stone. It will change over time as your life situation changes. By keeping a monthly budget you will soon have a good idea of whether you're on the road to achieving your goals.


Tip: Record your daily spending with anything that’s handy—a pen and paper, an app or your smartphone.



Quick Tips:

  • Small savings can add up to big savings, so don’t overlook the little stuff. You might be surprised at how much extra money you save over time by making small changes.

  • Set yourself up for success by automating payments for specific purposes. This can save you time and money.

  • If you're struggling don't be shy about asking for help. An accountability partner, a professional financial consultant or online support group can be a lifesaver. 

  • Check and adjust your budget regularly, monthly is recommended, to get a complete picture of your finances. Budgeting on a consistent basis will not only create a spending plan for your money, it will bring you peace of mind and ensure that you will have enough money for the things that are important to you.

  • There are several free budgeting tools and apps that can found online to help you record your budget and/or update it regularly. 


Happy New Year! It's the start of endless possibilities for an exciting year ahead. If one of your goals in 2018 is to own a beautiful lake cottage in an amazing recreational community, Contact Us at CottageClub Ghost Lake or Book A Private Tour.  We'd love to see you enjoy this extraordinary cottage lifestyle! 

To get started, download your free guide to the 5 Easy Steps To Buying A Cottage. 



CottageClub Ghost Lake is Alberta's premier recreational community located only 35 mins west of Calgary! 


Private tours are available by booking online or by phone.

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