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How to manage and create a financial plan . Living well on a fixed budget.

Updated on October 9, 2015
Tame your financial dragon by creating a budget.
Tame your financial dragon by creating a budget. | Source

How to Create a Budget

Understanding how to budget is a skill that can mean the difference between living well or living in constant stress. Whilst budgetting may not sound fun the result of living within a budget can lead to fun. Whether you live on a fixed tiny income or have a high income it has been proven time over time that we tend to live to the maximum of our income. In this budget - or financial plan - I have included paying yourself in the top line and aiming to save for both pleasure and emergency situations..

Use the following financial planning budget sheets for income and expenditure to get a realistic picture of your income and expenses. Make adjustments within the expense lines so that you have money for pleasure and savings. That may mean giving up unnecessary or spur of the moment spending. By creating a budget you will benefit from knowing exactly how much money you have and not having additional stress about special ocassions such as Christmas or birthdays, or if something happens that means you earn no income for a three month period of time.

Budgetting is like creating roots that grow deept into the ground and make healthy growth
Budgetting is like creating roots that grow deept into the ground and make healthy growth

Financial Plan - Budget Sheet Income

Monthly Family Income (net) (Use all that apply)

Employment Income


Child Support


Self Employment


Child Tax or Child Benefits

Misc Net income



Financial Plan - Budget Sheet Expenses

Self (10% of net income) This is your discretionary spending total for the month

Savings - 5% of net income. This money is untouchable

HOUSING Expenses


Property taxes/strata fees

Heating/Gas/Oil Fines/Penalties





Hydro/electrical use


Living Expenses




Furniture Grooming



Car lease/payments



Public bus Tickets/Bus Pass

Rail Travel/Rail Pass

Personal Expenses (Discretionary)

Charitable donations


Social events




Medical Expenses

Treatments e.g. chiropractic/massage



Non Discretionary Expenses

Child/spousal support










Managing Financial Problems

Facing the problem

If after competing the budget you recognize you are unable to meet your financial obligations or if you are drowning in debt, no matter how that happened, the most important first step is to face the problem head on.

In these uncertain financial times people across all socio-economic groups are facing a financial challenge. It doesn't matter if the debt is $100, $1000 or $1000,000 dollars - debt is debt and the stress and threat to health that goes with it is considerable.

Understanding that this problem is not unique to you and your circumstances is important. Reaching out for help that will assist you to change the current situation is essential.

I am writing this as one who has been there - job loss and health issues created serious financial hardship - but the real problem was burying my head in the sand and not changing my relationship with money.

The first Step

Assess whether the current debts that you have are caused by one or more of the following:

  • Unable to pay the minimum on credit card statement(s)
  • Using credit card for items that used to be paid for in cash or with debit (groceries/incidentals)
  • You are over/at or close to all credit limits
  • If you lost your job today, you'd be in immediate financial trouble
  • You have no clue about the size of your total debt or monthly expenses
  • You're arguing with your partner at home about money
  • Your bank overdraft always needs an overdraft
  • You've consolidated your debts more than once
  • You're receiving harassing phone calls from creditors
  • Stalling one creditor to pay another
  • No money before pay day
  • No savings
  • Charging more per month than paying on account
  • Requesting credit limit increases
  • Making unplanned major purchases.

Highlight as many contributing factors on the list that have led to the current debt problems. Add more if you have different ones.

Breathe. You have taken the first step. You may be feeling overwhelmed and feel like blaming yourself or others. STOP. In order to change our relationship with money it is important to practice our practical and cognitive responses. Self blame, emotional attachment to being in debt/victim of debt and not taking reposibility by blaming others is like driving whilst texting, we will crash and the mess will get worse.

Now you are ready to take the next practical step. Based on how much you owe and whether your debts are in collections or not you will need to consider which professional help is right for you. These are some options:

  • If your debts are repayable and you have income coming in consider talking to your bank about a consolidation loan at a lower interest rate than your current credit cards.
  • If your debts are all in collections, you have regular income and a bank loan is not possible research credit counselling societies in your local area.
  • If your debts are in collections and you have no regular income coming in call and research local trustees in bankruptcy/credit proposals in your area.
  • Call the credit card companies yourself and ask to speak to someone who has the authority to negotiate a repayment plan with you.

Other than a lower interest rate loan to consolidate debts DO NOT attempt to borrow or re-finance. This will create more of a problem down the road.


The Good News

Whatever your financial picture is right now you can change it. With some small adjustments to spending, saving at least 5% of your income and only using 10% of your net income towards discretionary expenses, possibly picking up a second job or renting out a room in your home for more drastic situations your finances will become healthier.


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    • Lizam1 profile imageAUTHOR


      5 years ago from Scotland

      Your Comment (open for 5 minutes)

      CarNoobz I have also discovered and published a hub about an online tool called It may help you both to fill that out and see where you have things in common. Oftentimes looking at the bigger picture helps us refine the day to day details. Thanks for reading.

    • CarNoobz profile image


      5 years ago from USA

      It's a constant struggle for us. I think the hardest part for my wife and I is just getting on the same page. We have the same long term goals, overall, but it's the daily spending decisions where we differ greatly.

      Great topic, though. Even a month after New Year's -- no, ESPECIALLY a month later. By now our New Years enthusiasm is waning and it's time to refocus on our goals.

      Voted up

    • Lizam1 profile imageAUTHOR


      5 years ago from Scotland

      Thanks teaches12345. It has taken me some years to get that and glad to have got it now.

    • teaches12345 profile image

      Dianna Mendez 

      5 years ago

      I like the way you ended this important topic, it is never too late to change and to start saving for a rainy day. Living within your means and saving for the future is the best way to budget. Voted up++

    • Lizam1 profile imageAUTHOR


      5 years ago from Scotland

      Thanks Vickiw - budgets can raise a feeling of being deprived which can be difficult. It certainly is so much less stressful when we are able to budget and learn to enjoy the resources we have.

    • profile image


      5 years ago

      For a lot of people budgets are boring, but I find them really interesting, as this is the way I have always worked. It is very useful when you are on a fixed income, in fact it can make life so much richer!


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