Budgeting. How do you do it?

by Jeff Kennedy, CIM

 How do you budget?

How do you budget?

Everyone budgets a little bit differently.  Some people track everything in spreadsheets or use money tracking software.  

I like to label everything and prefer an automated approach.  Here is what I do.  It might not work for everyone, so I'd like to hear from you in the comments on how you approach it.

1.  I identify my top savings goals.

  • Retirement
  • Kids University
  • Tax
  • Vacation
  • Emergency
  • General Home Repair
  • Etc

2. For the short term savings needs, I setup a high interest savings account with automatic transfers set to come out right after I get paid.  (A lot of banks like Tangerine let you segment and name your accounts).  I name each account "Vacation Fund", "Tax", etc.  This way I can't spend it without knowing I am taking money from a top savings goal. 

3. For long term savings like retirement, I have investment accounts with a discount brokerage firm.  Again I automate the withdrawals to happen right after I get paid. 

4. For day to day spending, I mainly use a credit card.  I schedule a lump sum payments to it from my chequing account to it and then check the statements periodically to see if it needs topping up.  What's nice about this is my bank can automatically generate a report on my spending.  (Note: This one might not work for people who have poor spending habits when it comes to credit cards).

5. For mortgage, again its schedule for right after I get paid.

That's it.  Fairly simple and automated and it works for me.  Makes me feel good knowing my top goals are taken care of right away.

I'd like to hear what works for you.  What do you do?

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