Budgeting Pays

Gordon Pape had an article in the Toronto Star recently on budgeting. The average Canadian spends their money on:

27% Housing
19% Transportation
16% Food
12% Household operations and furnishings
12% Recreation, education, reading
6% Clothing and footwear
5% Health and personal care
3% Tobacco and alcohol
based on a 2009 survey from Statistics Canada, using after-tax dollars
Most families seem to fly by the seat of their pants, which may explain why our personal debt has hit record levels. Fresh Statistics Canada data shows the ratio of debt to personal disposable income rose to 152 per cent last quarter, up from 150.6 at the end of 2011.

What’s missing from this list?
Debt Repayment – specifically credit card balances, student loans, line of credit repayments, etc.
Savings – the rule of thumb is you should aim to save 10 per cent of your income in some form or another.
So you need to add both of these items to your list.
If you already have a budget, start by comparing the average percentages to your own household allocations. If you are spending more than you should in some categories ask yourself why. See if there are some savings opportunities available and, if so, make revisions.

If you don’t know what you are spending your money on – now is a great time to start. Send me an email and I can send you a worksheet you can use to track where you are currently spending your money. Once you know where you are spending your money, you can develop a budget that you can live with.

Just remember – your budget must balance – or you end up deeper in debt.

Budgeting can result in your having more money at the end of the month (also you’ll sleep better.) So get started now.  Call me if you need assistance.