A Reasonable Toronto Realtor
  Re/Max Realty Specialists Inc., Brokerage
Independently Owned and Operated
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Create a Budget to Save your Downpayment

Creating a budget is the first step to successful money management. How can you manage your money if you don't know how much you have or what you're spending it on?

A budget has two parts, income and expenses. The object is to keep your expenses at or below your income. Sounds easy, but as we all know, it can get a little tricky sometimes.

OK, get out a sheet of paper. Yes, now. If you wait until later, you might never get to it. Got the paper? Good. Use the following list as a rough guide to list your expenses.

If you are not sure of the amount, go back through your checkbook for the past few weeks or months to get an idea. For items you pay cash for, such as fast food, think about how many times per week or month you normally spend money on that item and how much you pay each time.


  • Mortgage payment or rent
  • Insurance
  • Taxes
  • Electric
  • Natural gas
  • Water
  • Garbage pick-up


  • Groceries
  • Cleaning supplies
  • Laundry
  • Dry cleaning
  • Home improvement projects
  • Towels, linens, etc.
  • Clothing


  • Car payments
  • Insurance
  • Gas
  • Routine Maintenance
  • Repairs
  • Air travel
  • Rental cars
  • Public transportation


  • Cable TV or satellite service
  • Internet access
  • Dining out
  • Bars, clubs, etc.
  • Sporting events
  • Parties
  • Lessons and recitals
  • Clubs


  • Telephone
  • Cellular phone
  • Voice mail, etc.


  • Hair cuts, perms, etc.
  • Make-up
  • Medical, dental, vision
  • Weight loss, diet products
  • Nutritional supplements


  • Credit card payments
  • Other loan payments
  • Child care
  • Items for baby/elderly
  • Allowances for children
  • Book clubs, magazines, music, etc.
  • Fast food
  • Investments
  • Vacation
  • Spending money
  • Donations to church or charity
  • Gifts (Christmas, birthdays, anniversary, etc.)
  • Emergency fund
  • Coffee, soda, cigarettes, etc.

If you've been making your list, it's probably pretty long by now, but stop for a minute and try to think of anything I might have missed. Is there anything special you need for work? For school? Do you have a hobby you spend money on? If you buy a new lens for your 35mm camera every year, you better put it in your budget.

Now that you have your list of expenses, go ahead and add them up. Figure all expenses as a monthly amount. For example, if your property taxes are due once per year, divide the amount by 12 to get a monthly figure. If your expenses are lower than your take- home income, skip to step 4. If not, continue on to step 3.

Most likely, you have more "I wants" than you have money for, or you wouldn't be reading an article on how to create a budget. Deciding what to cut is the hardest part of making up a budget.

Start by determining how much you need to trim. To do this, subtract your income from your expenses. If your take-home pay is $2000 per month and your list of expenses came to $2200 per month, you need to trim $200 per month. The figure may seem daunting at first, but if you look hard enough at your expense list, you can usually find a few items that are easy to cut.

I can't see your list, so I can't tell you what to cut, but here are some suggestions.


  • Eliminate cable/satellite service or cut back on extra subscription channels.
  • Switch to a free Internet access provider if you are paying for internet access.
  • Cut back on smoking if you can.
  • Cut back on caffeine if possible. Drink water.
  • Take lunches to work instead of eating fast food.
  • Shop around for cheaper home and auto insurance.
  • Use coupons and online services to save money on groceries.
  • Rent videos instead of going to the movies.
  • Turn down the water level on your washing machine and dishwasher if it is adjustable.
  • Turn the lights off.
  • Turn the heat or air conditioning down while you are not home.
  • Don't overheat or overcool when you are home. If you can stand it at 80 degrees in the summer, don't turn the A/C to 67.
  • Find a bank with a no-fee chequing account if you don't have one.
  • Research the 10-10- access codes for long distance. You should be able to get long distance for about 5 cents per minute.
  • Talk on the phone less. You have a free ISP, right? E-mail as many people as you can instead of calling. Talk everyone you know into getting ICQ so you can chat or send messages back and forth.

You're almost done! You know how much money you make, and you have trimmed your expenses to match that income. Now what? Write it down. Wait, let me say that again in case you missed it - WRITE IT DOWN! If you don't, you probably won't stick to it.

I have a section in my daily planner for my budget. There is one page for each paycheck. At the top of each page, I write the date that I will be paid. Below that, I list everything that needs to come out of that check.

To do this, you need to divide your expenses as evenly as possible. If your largest bills are all due at once, move some up and pay them a little early, rather than trying to fit them all into the same pay period.

As promised, here is a sample budget to use as an example. This sample is based on a bi-monthly pay period with a take-home income of $2000 per month.


  • Car payment $292
  • Car insurance $139
  • Day care $200
  • Electric $50
  • Natural gas $60
  • Phone $45
  • Personal debt $40
  • Cable TV $34
  • Groceries, etc. $80
  • Gasoline $40
  • Spending money $20


  • Lot rent $332
  • Investments $200
  • Day care $200
  • Credit card $80
  • Groceries, etc. $80
  • Gasoline $40
  • Water $20
  • Gifts $10
  • Car maintenance $10
  • Spending money $20
  • Kids' allowances $8

Well, that's all there is to it. I hope you were able to put together a budget you can live with and stick to. Just one more little tip: When you're trimming down the extras, try to leave at least one or two items you do just for fun. Otherwise you may end up feeling deprived and toss the entire budget out. Good luck!


  © DAVID PYLYP of Re/Max Realty Specialists Inc., Brokerage
Independently Owned and Operated
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