Create a Budget to Avoid Going Bankrupt

Creating a budget is a vital piece of a sturdy financial foundation and will prevent you from filing bankruptcy in Victoria BC. A budget will help you better manage your financials, from controlling your spending, saving money and paying off your debt. Without having a clear distinction of what you are spending and saving, you easily rely on credit cards and loans to pay for other expenditures and bill. If you have already made a budget, then now is a great time to update it.

List Your Income

Make a list of all your income sources like wages, alimony, child support, etc. Make sure that it’s a reliable source, getting money from outside jobs and hobbies isn’t considered so don’t put it on the list. A budget should be something written down so you can constantly check on it. If you don’t have a steady income or is self-employed, utilize an average monthly income or an estimate of the amount of money you expect to accumulate in a month.

Add Up Your Expenses

A number of your monthly expenses are fixed, such as rent/mortgage, child support, property tax. While other may vary like the groceries, electric and water bills. Make a list of all of these expenses. For your variable expenses, make an allowance by writing a maximum amount you are going to pay to said expense.

You can always check your bank statements to determine what you normally spend each month to ensure that you do not leave out anything.

You will have expenses that you will not be paying every month. However, taking into account all of these periodic spendings in your monthly budget will make it easier for you to afford them.

Calculate Your Net Income

Your net income pertains to the amount of money you have left after paying your essential bills. You may want to make sure that this is a positive number. Compute for your net income by deducting your expenses from your monthly income. Write this down; even it turns out to be negative.

Adjust Your Expenses

If you have negative net income, it simply means that your spending is more than your income. You may have to correct this or you may have trouble. Variable expenses are normally the first you can adjust your spending too. Even fixed expenses can be adjusted. Assess all your spending by determining them if they are “wants or needs”. Minimize spending on the “wants” area to make room for the “needs” department.

Track Your Spending

It can also be good to track your actual spending for the month against your budget. If you go overboard on your budget, this will aid you in figuring out what have you spent on more so that in the future you can lessen on spending in that area or may have to adjust your created budget to make up for added spending. If you are planning to increase your budget in a specific area, make sure to decrease another area so you will not go beyond your budget.

Contact G. Slocombe & Associates Inc. if you are filing bankruptcy Victoria BC.