Earlier this week, Melanie gave you five tips to help spring clean your finances. Another important piece to getting your financial house in order this season is setting a new spring budget.
As soon as spring arrives, and a glimmer of sunshine peaks through the once-snowy clouds, you begin to imagine what the nicer weather will mean for you: cleaning and renovating your home, sitting on a patio for coffee or dinner, and planning summer vacations, are just a few of the ideas that come to mind. While imagining crossing ideas off of your spring/summer must-do list, it is important to remember that a price tag is attached to everything.
In the beginning of every new season, it is a good idea to re-assess your budget. Whether it’s fall leading into Christmas, winter paying off the holidays, or spring and summer planning and activities, each season requires different financial needs. So, as you’re spring cleaning, consider adding ‘re-do budget’ to your list. Here are five steps to help get you started:
Step 1 – Review Your Existing Budget
When going over your budget, it’s important to ask yourself a lot of questions and to be honest in your answers. Some questions may include: What was your budget for January through March? Did you stay on budget or did you go over? If you add up all of your expenses, is there anything you can cut back on this season? For the next three months, will your earnings be changing at all? And will you be taking on any new, large expenses (e.g. a renovation or a vacation)?
Step 2 – Plan Any Major Projects
Spring is the season of new projects, and even if you’re not going to complete a home renovation in the spring, it’s a good idea to include it in your budget. Are there any minor or major home-based projects you want to complete? Chances are, if it’s a major renovation, you’ve been saving up for it, or at least thinking about how to finance it, for a while. Earlier this month, I told you about using financing options like a Home Equity Line of Credit (HELOC). But whether you save up or finance, you will need to pay for the project, so start calculating what it is going to cost you and how you can make it affordable.
Step 3 – Organize Trips and Vacations
After months of being housebound by the cold weather, spring is a reminder that weekend trips and summer vacations are just around the corner. Ask yourself what you will be able to afford this year. Will you be camping, renting a house at the lake, or flying to a new destination? Or, will you plan a staycation? Whatever you decide, remember that it will cost more than just travel and accommodation: groceries, gas, eating out, and new camping equipment are just some added costs that you may need to pay for.
Step 4 – Consider All Upcoming Events
With spring’s sunny weather comes weddings and parties. It is important to anticipate the number of events you will be attending, and presents you will need to purchase, over the next few months. Between April and June, how many people do you know with birthdays? Are you planning on buying all or some of them a gift? Are any of your friends currently pregnant and due soon? If so, remember that there will be a baby shower. Have you been invited to any weddings? If yes, are you in the wedding party? Do you need to buy a new outfit? Remember that weddings also include stags and showers, so you usually have to attend a few events and buy a gift for each one. And do you know anyone who is retiring or graduating?
Step 5 – Draft Your Spring Budget
Once you know your potential income, your fixed expenses, and your average monthly expenses, you can start drafting up a new budget. Leave room for your projects, the trips you want to take, an approximate cost of all of your upcoming events, and assess if it is all do-able. If it’s not, don’t just plan to go over budget, make the necessary cuts.
If you need some extra help with the last step, consider using an budgeting software tool, such as Mint.com. Since Mint.com was made available to Canadians in 2010, it has become one of the most used online personal finance tools – and it’s free. If you haven’t done so already, consider creating an account and allowing the software to help you draft up a reasonable spring budget.
Writer for RateSupermarket.ca