There is a myriad of things you would rather do than make a budget. However, the peace of mind that comes with it is well worth it.

It's easy to set aside some money for rent and insurance payments, but not so much for seasonal or occasional expenses. Did you save money for Christmas presents and back-to-school material? These are only two examples of what could give you a major headache if you don't plan for them.

Writing everything down on paper will allow you to make choices and plan ahead to save money. If you want to add a dream or a project to your life, making a budget becomes the key to making them a reality.

How

The person who is better at managing cash but has difficulty managing different bank accounts can use our ancestors’ method: having a different envelope for every bill in which you place money every month (or every pay check). This way, you will have an envelope for rent, for groceries and insurance, but also for gifts, leisure, books, trips, etc. Good self-control is a must, otherwise you will end up taking money from the envelopes for “emergency” purposes and your budget won’t be effective.

The person with a habit of spending all his/her money as soon as they get paid should have different bank accounts and have money transferred automatically every month. Having money transferred automatically is a great way to pay your bills and verify how much money is left over. Having your due date set for mid-month rather than at the beginning is always a better idea, since expenses tend to multiply then.

Basic budget

You can have a daily, weekly or monthly budget. The more specific your budget is, the more precise your finances will be. If you get paid every two weeks, it may be a good idea to make a budget according to your pay period.

Start your budget by calculating your total income: paycheck, government benefits for children, alimony, tax return, etc. In another column, write all your expenses starting with all recurrent expenses such as rent, electricity, phone, insurance, etc. Follow with the expenses that vary from one week to the next. For instance, you have to make a realistic projection of your weekly grocery spending, keeping in mind that groceries will be less expensive in the summertime. As far as clothes are concerned, the same logic applies: you spend a lot of money at certain times of the year and almost nothing at other times.

During the back-to-school period, you will probably spend more than you make. People who haven't put money aside will get an unpleasant surprise when they receive their bills. There are consumable school supplies (pencils, erasers, stationery, etc.), mandatory notebooks, books, school bag, lunch box, daycare, clothes, and haircuts that all add up to your expense list. Let’s not forget that some schools even ask for extras (e.g., a second pair of shoes to go outside, a ten-dollar contribution for school trips, etc). And this does not include your child’s extracurricular activities and allowance for weekly lunch.

In addition to routine expenses and the unexpected expenditure, you must also plan for the long-term: the family trip you promised a long time ago, house renovation, and the kids' higher education (which will come faster than you think). Knowing that it will cost over $100,000 for your child to go through university in 20 years, it's very important to plan ahead.

Need help?

The CTF (Canadian Tax-Foundation) offers classes on how to make family budgets and better organize your personal finances, as well as individual meetings to get information and advice on a difficult personal financial situation.

The Canadian Bankers Association website (www.cba.ca) offers a lot of information and advice on budgets, savings, expenses, income, savings plans, etc.

Most people spend money on things they don’t even remember about by the end of the week. Industry Canada (www.ic.gc.ca) offers a “calculator” that demonstrates the positive effects of saving money instead of spending it all.

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