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3 Budgeting Tips to Master Your Cashflow

Use these resolutions to create a realistic budget that will let you pay down your debts and give you the opportunity to put something away, while not forcing you to be too disciplined in order to make it happen.

3 Budgeting Tips to Master Your Cashflow

Resolution #1: Gather The Facts

Before you do anything else, you need to know how much money is coming in and how much is going out each month. If your income has changed due to COVID, you should take a step back to gather information.

For people who receive a regular paycheck, estimating the amount of money coming in is as simple as calculating your post-tax income. But for anyone whose income varies throughout the year, things can get much more complicated, especially during a pandemic. A relatively safe way to budget with an irregular income is to use the lowest-earning month from the previous year as a baseline for creating a budget. A less secure, but probably more realistic way to budget, would be dividing the last year's income by 12 and using that number as your monthly budgeting baseline. 

Once you determine the amount of money you’ll likely have coming in, you need to know what you are spending on a monthly basis. Track your spending for as many months as possible to create your average monthly expenses. Separate this average monthly expenses into two categories: needs and wants. Needs are bills you have to pay, like housing, food, insurance, basic utilities, minimum loan repayments and transportation. Everything else is a want, like entertainment, eating out and shopping.

#2: Have a Budget Plan

Without a good plan, you won't meet your financial goals.

There are lots of different ways to set up a budget, but the most important thing is that it works for your situation, and you can stick to it. Try using a spreadsheet, downloading an app or creating a handwritten budget to get started. Based on your tracked spending, you can determine how much you should spend on needs and wants each month. Don’t forget to budget for savings too. For example, you could put 10 percent of your monthly income into your savings account.

During a time of economic uncertainty, you will also want to keep an emergency fund, or a financial cushion, in your budget so that you can be prepared for unexpected events or loss of income.

#3: Adjust Your Spending Habits

A budget only works if you are willing to change your spending habits.

Our needs and wants can vary each month, so you have to be flexible with your budget. For many people, cutting down on spending is a painful experience. But there are ways to make it a little less uncomfortable.

Control Impulse Purchasing

While you are still at home, make a list of items you will purchase and don't give in to temptations at the store. If you see something which you really want in the store, write it down to buy on your next visit. It is amazing how many 'must-buy' items lose their attractiveness after a few days.

Use a Credit Card, But Pretend It’s Cash

The advice used to be that you should always use cash when you shop, but cashback and other incentives from credit cards makes using them a great deal - if you can avoid interest charges. When possible, avoid spending more money than you have in your “want” budget for the month.

Avoid the “Little Luxuries”

Small expenses can really add up. Limit your visits to the coffee shop and start bringing your lunch to work. It won't be long before you notice substantially more money in your pocket - without a whole lot of sacrifice.

Remember that budgeting is an ongoing process. You will need to revisit your budget plan from time to time to make sure that you are staying on track. Try out these budgeting resolutions in 2021 to get back on track towards your financial goals, especially if you are feeling overwhelmed by the uncertainty of the coronavirus pandemic.


Our favorite budgeting technology is Monarch Money. We set each of our clients up on this platform to make mastering their budget easy and sustainable.

Invest In a Life You Love,

Donovan Carson - founder of Carson Capital



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