By Jennifer Clyne

Why Budget?

We budget because we have goals for our future. What are your goals? To reduce debt, save for retirement, purchase a house? A combination of things? Write them down in order of importance. Once we know our goals the next thing to do is figure out how we are going to get there.

Where to start?

Budgeting is like getting in shape. If it is too hard there is a high likelihood you will fail, and end up feeling worse about yourself. Figure out an attainable plan that you can stick to. The hope is you can get to a place where you create a lifestyle where you can incorporate your plan, and it just becomes habit.

Step 1. Figure out your income and expenses. You can use Tool 1 under “tools for success”

Be honest, and fill out your current income and expenses accurately. This is meant to be a realistic look at your current situation. Check your credit card statements and bank statements to find out as close an approximation as you can for things like groceries, meals out etc. Some credit cards will even break this information down for you.

Once you fill out the budget worksheet you can see what your situation is. Are you net positive or negative at the end of the day?

Are you happy or unhappy with the results of how much is leftover at the end of the month? If you are unhappy with the results, what can you change?

a.)     Reduce expenses

b.)    Make more money

c.)     Combination of the a and b

Step 2. Reduce expenses

Where can you cut costs? I find this can be done in places like entertainment: eating out, alcohol consumption, cable television, etc. Our most important expenses are food, shelter and clothing. The rest are things we don’t need to survive. One rule I live by is that during the work week, Monday to Friday, I don’t allow myself to eat out or drink, except for special occasions. I do this for a couple reasons: to save money, and to be healthier. It also makes me appreciate these things more when I do them. Do you need more ideas for cutting costs? Consider these:

·       Cancel expensive gym memberships you don’t use.

·       Reduce your cable and internet plan, or just plain try and haggle for a better price.

·       Eat out less.

·       Reduce drinking, smoking and drugs.

·       Reduce activities like tanning, manicures etc.

·       Consider buying things second-hand instead of new.

·       Use a credit card with the most effective rewards program (if you have credit card debt please be wary that it is more important to have lower interest costs, than it is to have a good rewards program. Reducing credit card debt is essential for a healthy financial future). I use the PC Mastercard because it gives me free groceries each month, which in turn reduces my expenses.

·       Find activities that are cheap (hikes, walks, making meals together, movie nights at home etc.)

·       Cancel things like monthly subscription boxes (i.e. Ipsy, Fabfitfun etc.).

·       Reduce debt: cheaper vehicles, more affordable housing, pay off credit cards, pay off student loans etc.

Step 3. Make more money

·       Work more (second job, if spouse doesn’t work have them get a job, figure out a side hustle etc.).

·       Figure out ways to increase your current business income (if you have one) through affordable advertising (social media, referral programs, loyalty cards, contests, etc.).

·       Invest wisely.

Step 4. You have figured out where you can cut costs and make more money, now how are you going to implement this? Different approaches:

a)      Envelope or Jar approach - this is ideal for people who need a very strict approach.

·       Get an envelope or jar for each category (food, transportation, entertainment, clothes/gifts, everything else) and write the category name on the front. After each paycheck, take out cash and put the budgeted amount of cash into each envelope. Remember to also put the budgeted amount for savings to your savings or investment account (do everything you can to never touch this money and let it build since this is the money you are saving for your goals).

·       Spend Cash Only. Get receipts for everything. Put all those receipts into the envelopes until the end of the pay period so you can review them each period. If you find yourself in a crunch in one category try to be creative to make it to the end of the period. If it is an emergency, you can use money from optional spending (like entertainment or clothes/gifts). Keep a notebook and track all spending. Your tracking could look something like this:


·       If you start to have a large buildup of extra cash, use it to pay off debt and/or put it in your savings/investments.

b)   Pay yourself first approach -This is ideal for someone who a more casual approach would be adequate for.

·       Each pay period, whether your goal is to currently pay down debt or to save, apply that first. Then you can use the rest of what you have left in your bank account for the rest of your month. If you run out of money, that’s it, you have to wait until your next pay cheque to spend any more money. This works best if you stop using credit cards, and only allow yourself to use your bank account. You will need to track all spending, the same way as the envelope method, so you can make sure you are spending in line with your budget. I also recommend you keep receipts for everything you spend so you can review them each pay period to see where your money has gone and update your budget accordingly.  

c)    Use an online tool like Mint. Mint is a free tool that allows users to track bank, credit card, investment, and loan balances and transactions through a single user interface, as well as create budgets and set financial goals.


The final topic, which deserves a bullet of its own, is debt. Debt can be scary and extremely expensive. It is very important to put a plan in place to reduce debt. If you have a high amount of debt make sure you set your budget to get your debt paid off in order of most expensive debt to least.

Other things to consider

·       Investment accounts which will pay government grants to match your contributions allow you to get better bang for your buck. Accounts that do that include RESPs (Registered Educational Savings Plan) and RDSPs (Registered Disability Savings Plan).

·       Investment accounts that allow you to defer taxes like RRSPs (Registered Retirement Savings Account).

·       Investment accounts that allow growth to be tax free such as a TFSA (Tax Free Savings Account).

Tools for success

Tool 1.  Budget Worksheet: https://www.consumer.gov/sites/www.consumer.gov/files/pdf-1020-make-budget-worksheet_form.pdf

Tool 2. https://www.mint.com/


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