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#ReachThoseGoals: The ABCs of Budgeting

Welcome back! This is the second article in #ReachThoseGoals, our six-part series all about budgeting to help you feel more empowered and in control of your finances. Consider it the simplified antidote to all of the chaos and confusion of money information from the news, ads, random strangers from the internet, etc. Whatever your goals, wherever you are, you’ve got this. And we’ve got you.

Now, let’s get into budgeting. We know, we know. The word “budget” can feel heavy, and like we’re straight up not having a good time. It can also seem like there’s only one “right way” to do it, and that the right way is really complicated. But that isn’t true. Think of it more like a tool in your financial toolbox or a way to map out your income and expenses over a period of time. The goal of this plan is to make sure you can sustain your financial well-being over time. It’s like setting new habits for your financial health versus restricting you.

Great, so how do you make one? Creating a budget is as simple as ABC: Analyze, Brainstorm and Change.

1 Analyze: How much money is coming in, from where? And where is it going?

Grab your credit card and bank statements and calculate how much money is coming in and how much is going towards your mortgage or rent, food, transportation, subscriptions, pets, hobbies, etc. Look at how much you’re paying in interest every month.

2 Brainstorm: What could you do differently that would increase your income or cut your spending?

Now that you have a sense of what’s currently going on with your cash flow, think about what you can do differently to alter that flow. For example, could you meal prep more? Or consider cancelling infrequently used streaming services or subscriptions? Start by taking a pen and paper or your notes app and putting down any ideas about how to increase your earnings or lower some spending. It’s not about getting it all right immediately or making every change at once, but starting somewhere.

3 Change: What are the changes you’re willing to commit to that will make the biggest difference?

Now, let’s choose two or three changes that you’ll commit to. This is what brings your cash flow into balance. Is it eating out one less time a week? Cancelling one of multiple streaming services? (There’s too many these days anyway!) Maybe you’ll find there’s something in there you can change that could also have a positive halo effect on your life elsewhere. For example, spending less time streaming could lead to more time outside, connecting with nature. Or eating out less could help you find a new favourite dish to cook with a friend or family member.

Budgeting may seem daunting, but when taking it one step at a time and sticking to the ABCs, budgeting, and managing your finances and accounts can feel a lot more digestible. Look at the whole picture of what’s coming in vs. where it’s going. What are some small things to start with that could lead to bigger, healthier financial habits? And what you commit to today, doesn’t need to be forever. Sometimes it just takes a reset to start fresh, get back on track and figure out what works for you.

As with anything, you’ll get better at building budgets once you’ve had some practice.

Like we said in the first article of #ReachThoseGoals, where we mapped out figuring out where you’re starting and setting goals, we all start somewhere, and wherever you’re starting today, Capital One is by your side to take on tomorrow. You’ve got this. We’ve got you. You’ve got this. We’ve got you. Now, ready for the next article? Let’s do this.