Managing your finances

Step 3: Organize your finances

Now that you have all of your financial information, figure out how much income you're receiving and how many expenses you're paying out each month.

Make sure you include your after-tax net income from your pay stub, rather than your pre-tax income. At this point, you may have to estimate some expenses but, as you continue to budget, your estimates should become more accurate. When estimating future expenses, it's better to make a high estimate rather than a low one.

To determine your financial position, subtract your total monthly expenses from your total monthly income.

Now that you have a summary of your credit card spending, the CIBC CreditSmart® enhanced monthly statement enables you to determine where you're spending your money, both on a monthly and year-to-date basis. Track your spending in 10 common spend categories like transportation, retail and grocery and restaurants.

Step 4: Create a plan of action

If you have calculated a positive amount, you may want to take this extra income and use it to pay off debt or save it to help achieve some of your goals.

If you have calculated a negative amount, then you may be spending more than you're earning and you may be using credit to pay the difference. You need to examine each of your expenses and make some budget decisions to get your spending on the right track. Start by reducing your least-important expenses. You can create your own categories and track your spending using the CIBC CreditSmart personal spend manager. It's important to act quickly to avoid potential credit problems.

Step 5: Set your budget

One of the best ways to establish a strong financial position is by setting a budget. A budget not only organizes your spending, it also helps you plan for and prioritize your expenses so you can achieve your future financial goals. One helpful tool to keep your budget on track is the CIBC CreditSmart spend report.