Budgeting Isn't Easy, But You Should Do It!

When it comes to chores and activities, budgeting is probably one of the most boring things you can do. If you are trying to start budgeting or have been looking for some helpful tips, below you find two ways to help you be smart about budgeting. 

Cash Diet 
This is a novelty idea as it involves using real money. No cards are involved at all. It works by writing down how much money is coming in and how much is going out each month. It is also a good idea to include the amount that you have in your savings. When it comes to paying utilities or rent, don’t pay with an envelope full of cash, but after you calculate how much you need for those bills, you take the rest out in actual physical cash. This allows you to have a physical representation of how much you spend on things like groceries, transportation, meals out, etc. If you spend 20 bucks buying something on Amazon, take $20 out of your wallet and put it in a drawer and use it towards your next withdrawal. The idea behind this is to help you physically see how much you are spending each month. 

Percentage Budgeting 
Here’s how this type of budgeting works: you take your post-tax income and lay it out as 50/20/30. This means that 50% of it will go toward fixed expenses like rent, student loans, cell phone bills, etc. 20% you put DIRECTLY into a savings account or RRSP, keep in mind this is not a fund to use in case you run out of fun money, this is for that major purchase you’re dreaming about. 30% goes to lifestyle and flexible money, groceries, transportation, basically everything you were using your cash for before. 

There are more than just these two types of budgets out there, however these two are a good way to help train yourself realistically about the money you are spending. It is best to be honest with yourself, especially about your money. This will also help with planning your financial future and help to ensure that you can afford some of the bigger purchases down the road.