11 Jan Debt Solutions with London Trustees: Create A Realistic Budget
For those looking for debt solutions in London, an important first step is creating a realistic budget. Financial insolvency is not caused by poverty per se, but spending beyond your means, even high-income earners can become insolvent and file for bankruptcy.
While professional assistance from a Licensed Insolvency Trustee be help you get back on track, below are some key tips to assist you in creating a budget.
1. Change Your Habits
Budgeting is about more than writing down all sources of income and expenses. It is about planning. If you are creating a realistic budget, because you have been living beyond your means, part of that will mean adjusting your habits to live within your means.
These can be simple changes, such as, packing a lunch vs. eating out or going to Starbucks once a week instead of daily. These simple lifestyle choices may save you a few dollars daily, however, they add up overtime and can lead to real savings.
2. Be Realistic
While lifestyle choices can help reduce your monthly spending, you should be realistic about the fixed expenses you cannot change. Failing to budget appropriately for fixed costs, such as heat and hydro, rent or mortgage payments will lead to the failure of your budget before you even begin.
Make sure you are realistic about all of your fixed financial costs as part of the budgeting process.
3. Prepare for Irregularities
You never know when you will have unexpected expenses for a car or home repair. Failing to prepare for these expenses is preparing for your budget to fail. Even as you are tightening expenses, you should try to set aside some funds for a rainy day or emergency.
4. Create or Use a Structure that Works
It is important to find a structure that works for the creation of your budget and sticking to that budget.
With today’s technology, that structure can be as simple as a pencil, pocket calculator and notebook, Excel spreadsheet or new smartphone apps such as Mint.com, Expensify, etc.
The point is not what technology you use, but that you find the right technology that keeps you on track.
5. Update as Needed
Change happens. You may get a new higher paying job or switch from driving to work to riding your bicycle. Whether it is a change in income or a change in expenses, you should always ensure you are updating your budget to reflect your income and expenses as they change.
It is important to stick with a budget, but when it no longer reflects your financial reality, it is time to adjust.
6. Allow for Indulgences
Sticking to a budget is a lot like sticking to a diet. Both take an incredible amount of willpower, focus and effort. In order to maintain those efforts, it is often useful to plan for small indulgences that allow you to remain on track. For dieters, that may mean treating yourself to a small piece of dark chocolate every Sunday to avoid a breakdown chocolate binge.
Similarly for expenses, if you are used to treating yourself to a Starbuck’s Latte everyday, going cold turkey may not be realistic. However, planning a special weekly Friday Starbuck’s trip with your favourite co-worker will allow you to indulge while still helping you stay on your budget.
These tips and tricks will help you stay on track, but you may need professional help.
At McLennan & Company Ltd. we focus our work on debt solutions in London and surrounding areas. We help individuals and families who want to start over financially. Contact our head office in London, Ontario at 519-433-4728 or fill out our online form and someone will contact you within one business day to schedule a consultation.
We know that this is a difficult time for you and your family and we offer free initial consultations. For your convenience, in addition to our main office in London, we also have satellite offices in Ingersoll and Woodstock and offer flexible appointment times.