Let's face it, creating a budget is something thing most people dread. Many Canadians think creating a budget can be time consuming and difficult to follow. However, having a monthly budget is freeing and helps Canadians create a path to financial success. Budgeting, like any other discipline, takes practice, continuous effort and time to master. So the question remains, how do you make a budget? House of Cars is here to help!

The End Goal:

When you create a budget, and follow it, you'll be enabled to do many things, including: cover your daily life expenses, pay off your debts, save for the future, and enjoy your money. Before even starting to make a budget, the first thing you need to do is set some financial goals. This will serve as your guide throughout the process. Some examples of financial goals include: build an emergency fund, get out of credit card debt, improve your credit score, buy your next car or pay off student loans. Once you've identified your goals, you'll want to allocate funds from your paycheque to meeting them.

How To Start Making Your Budget:

Once you are ready to start working on your budget, list and add up your total household income from all income sources: part-time or full-time job, rental property income, side hustles, etc. Once you have that total, it’s time to take a look at your total monthly expenses. You'll want to look at things like: your mortgage or rent, utilities, car payments, insurance, food expenses, miscellaneous spending, etc. and make sure your expenses are below your income. Now it's time to add some of your financial goals to your budget by following the 50/30/20 rule:

• 50% of your income for basic needs: rent/mortgage, food, utility bills, insurance and childcare
• 30% of your income for your goals: travel, entertainment and dining out
• 20% of your income for your savings: investments, savings account, building an emergency fund, etc.

Sometimes you can't follow the 50/30/20 rule to a T, and that's okay. A very important rule when budgeting is always making sure these four key needs are covered: food, shelter, transportation and clothing.

It is crucial to first make sure you have money for these four areas of your life and then you can allocate the rest of your income to other areas such as paying off debts or saving.

Not Sure What To Do? There's Help:

We pride ourselves in our robust credit rebuilding program. We want every House of Cars customer to leave our dealerships with a better understanding of their credit, and how they can leverage their credit to help with things like car loans, credit card bills, etc. Our financial services department also offers plenty of amazing offerings to help you get on the right track to following your budget. We offer debt and credit consolidation, cash back services and so many more great financial tools to help you pay off those high interest bills and focus on allocating your money to the right places. Did you know that by consolidating your high-interest credit card bills with your next car loan will lower your overall monthly payments? This means more money in your pocket to allocate to your financial goals!

Making Your Budget Work:

By following these four important steps, you can make your monthly budget work for you:

1. Cover your four key pillars first (food, shelter, transportation and clothing)! Always make sure these are covered before you even think about saving
2. Once your budget it set, stick with it!
3. Always spend less than you make! If you have money leftover each month, you're in a great position!
4. Use the 50/30/20 rule to build your budget (50: needs, 30: wants, 20: savings)!

Next Steps:

How does financing a car work? When it comes to making large purchases like a home or a car, most people don’t have large sums of cash in their savings accounts just waiting around. But if you do in fact have thousands of dollars tucked away somewhere, then there is a clear benefit in putting it towards your car purchase. But there's also benefits to keeping that money in your pocket.

The main benefit of a cash purchase is that you get to avoid paying interest.

If you have the money ready to purchase a vehicle, it might seem like a no-brainer to pay outright and avoid the interest charges, but it’s not always the best option.

The biggest advantage of financing a vehicle purchase versus paying cash is that you can buy the car now without paying a single dollar upfront. 

So what does financing a car mean? Simply put, financing a car means borrowing money from a bank to pay for your vehicle purchase and paying the bank back in manageable installments. House of Cars can offer zero money down payment options*, which are quite popular simply because a lot of people either don’t have the money to put down or have a better use for their savings. Intrigued? Read on!

For the average car buyer, a car loan opens up more vehicle options. When you’re able to borrow the money and pay it back over a manageable period of time, it gives you the opportunity to buy a car you may not have been able to afford if they were paying cash. That Honda you were looking at paying cash for could become a Mercedes-Benz!

But even if you have the savings to pay for that nicer car in cash, financing can be the better decision for multiple reasons:

1. Rather than spending your cash on a car, you can use that cash to invest in other opportunities that will see the money grow, like investing in real estate or investing in stocks, mutual funds or EFTs. The money you make from your investments very well might cover the cost of your monthly car payments, or at least a portion of them! To be rich is to afford a nice car. To be wealthy is to be able to use the same money to invest and afford that same car using the proceeds of their investments.
2. Rather than put all your free cash into a car purchase, it’s important to have enough savings to pay for an emergency expense such as a home or car repair.
3. Buying a car with zero down payment can also free up your income for other debt obligations with higher interest, like high mortgage payments, lines of credit or credit card debt.
4. Did you know that we can often find our customers an interest rate that's cheaper than the interest rate of a line of credit?*

Being smart with your money certainly has its advantages! Keeping your money in your pocket and leveraging it to make more money is the smarter decision than putting it all towards a vehicle, which will lose value over time.

If you decide to pursue financing, it’s best to choose a monthly payment that is manageable for your budget. We can offer auto financing options for every budget. Check out our car loan calculator for a rough idea of what your monthly instalment could look like.

If you’re not sure what amount you can get approved for, you can get pre-approved before you even start the financing process. House of Cars can help you get pre-approved and connect you to dozens of $0 down lenders. Apply with us for free in just a few minutes!

*On Approved Credit