Prime Yourself for Success: Personal Budgets

When people think of budgets they often think of constraint. To them a budget limits your spending and thus your diminishes enjoyment of life. While it’s true a budget may curve your spending habits it is actually an enabler that allows you to take control your finances.



Now honest to God, I’m probably the last person that should ever quote a hip-hop artist given my lack of rhythm, but this line is pure gold. To me it embodies the ideal comprehensive mentality when it comes to personal finances. A successful guy like Jay-Z has planned his way to prosperity, despite all the “hustlin’” references that are made.

All successful businesses spend a good deal of time planning and budgeting because if you don’t know where you’re going, you’ll never get there. There is absolutely no difference in personal finance. Putting pen to paper is the best way to get a hold of your financial situation.

Don’t You Dare Overthink It!

You don’t need to spend every waking hour doing up a personal business plan and tracking your every financial move. Quite often if a plan or budget is too complicated it’s not going to be effective.

The budgeting process essentially has three steps:

1)      Planning – determining your financial goals (where you want to be) and how to get there

2)      Tracking – Monitoring your progress towards the above goals

3)      Adjusting – Fine tuning your original plan based on results

When I first started tracking my expenses after university it was extremely easy because I was hardly making anything and I wasn’t spending all that much. I didn’t have much of a plan because there were a ton of unknown variables in the mix and I wasn’t too sure where my career path would take me. Once I received my first low-paying accounting job I started planning to purchase my first house. This is where I realized the power of the budget process and it allowed me to save a 20% down payment within two years on a salary below $40,000/year.

I understand some people are genuinely uninterested in their finances or maybe are a bit scared to look at their situation and as a result put their head in sand. If you’re one of these people, or you really don’t think you can or want to get into the numbers I highly suggest a fixed-fee financial planner. For some households that have more complex situations a financial planner can save you a lot of money. I’ll post an article on this shortly.

Your Very First Budget

I’ve attached a template for a budget and tracking sheet in excel. The yellow highlight boxes are input cells for you to enter. The top box labelled “2013 BUDGET” is where you estimate your income and expenses throughout the year.

2014 Budget & Tracking

Typically income is fairly straightforward and easy to track. When tracking expenses I suggest you review your bank statement and credit card statements each month to input what you’re actually spending. Tracking expenses on a daily basis can be too tedious. If you need any help or have any questions be sure to send me a message.

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