Good financial planning begins with a  household budget. Creating a budget helps you understand where your money is going each month and also allows you to develop a plan for saving. It is important to have a budget so that, you can easily track your spending, keep, monitor and reach your financial goals.

What are your incomes and money-in?

First, determine your money coming in.  It’s likely that most of your household income will be coming from your employment.  Take a look at one of your pay stubs and see how much you get each month after taxes and payments for items like benefits, parking, donations, etc.  Don’t forget about other forms of income from other sources, such as stocks or a rental property, pension, Canada Child Benefit, etc.

What are your fixed expenses?

Once you know your monthly income, you should subtract your necessary fixed expenses from the total. These are expenses you absolutely have to pay each month and can’t change for the time being. This includes bills like your mortgage or rent, utilities, car payments, and insurance premiums. Remember that even items like groceries, while they need to be factored into your budget, are

What are your savings goals?

After you’ve subtracted your necessary expenses, you should set a target savings goal out of what’s left. This is money you’re going to put aside for long-term financial goals like saving for a down payment, emergency fund, educational expenses, a trip, and retirement savings. It’s important to put your savings aside as soon as you get each paycheck because otherwise, it’s very easy to spend everything and not have any money left over.  Once decided, set up an automatic debit from your chequing account.

How are you managing your debt?

There are good debts and bad debts.   Mortgages would be considered good debt, while credit card balances would be considered bad debt.   Credit cards and lines of credit should be a priority to pay out because they are usually at the highest interest rates.   If you are carrying balances, you must ask yourself why.   Chronic card balances could be a sign that you are living above your means and adjustments need to be made.

What are your variable expenses?

Variable expenses can sneak up on you.  In my experience, most people don’t seem to know how much they spend on food (both grocery and restaurant), nor do they know how much they are spending on subscriptions and small day-to-day purchases.   The best way to see what you’ve done is to pull out all of your monthly financial statements (Bank account, credit cards, and lines of credit).

Write it down.

Writing it down or creating a spreadsheet is an excellent exercise and it helps identify exactly where you may be overspending or undersaving.   We have a pretty decent budget worksheet that may help you which you can download below.

Once you have written down all of your income and expenses, you are going to have a surplus or a shortfall.   This is the moment when you may feel a little nauseous and realize that you either need to reallocate resources, spend less or earn more.  It’s really important at this stage to NOT PUNISH YOURSELF.   Budgeting is a lot like dieting and exercising, it’s very easy to make bad choices and fall off the wagon.   You have to think of this as a process that takes time and tweaks.   Knowledge is power.

Debt Reduction & Saving Increases

Once you have made some tweaks to your monthly spending habits, the next step is to address debt.   Improving your cash flow can increase your savings and help you manage your lifestyle.   It is important to reduce debt and debt payments by paying them off quickly or refinancing or consolidating.    If you aren’t in a position to consolidate or remortgage, you can try a debt hack called debt stacking.   This process gets you to focus on your smallest debt first to pay off.  Once paid off, you can then take that monthly payment and add it to your next smallest debt balance.   This will help you to focus and feel more accomplished.  It can also help improve your credit score.

Savings is also important.  Pay yourself first is the best rule of thumb.   A few years of not saving now could end up costing you $1000s if not tens of $1000s in the future.   Basic accounts one should consider are RRSP, TFSA, and High-Interest Savings accounts.

You can download our budget worksheet below!


10 Steps To Budgeting:

  1. Get mentally prepped.  Budgeting can be a painful and boring process.   You will be potentially uncovering bad habits and things that may make you feel embarrassed or silly.   It’s important to be ready for these instances and to be able to forgive yourself.
  2. Download our budget worksheet above or a similar one and print off one month of statements.  Your bank statements, your credit card statements, your line of credit statements.   Also, print out your paystubs and all income that you will have coming in.
  3. Record all of your debits and credits into your budget worksheet’s categories.  If you have bi-weekly payments or income you must get the correct monthly amount.   You cannot simply double the bi-weekly amount.  You have to multiply the bi-weekly amount by 26 and then divide by 12.   Monthly Amount = Bi-weekly amount x 26 / 12.   Use your NET INCOME.  It is just a little easier for the novice budgeted.  Don’t forget to add your CCB, any pension income, rental income or even some side-hustle income.
  4. Do you have a surplus?  Hopefully, but chances are if you are going through this process you are more interested to see where all your money is going.   If you have a deficit or shortfall you will need to do one of 3 things.   Refinance existing debts,  spend less or earn more.  If you opt for refinancing debts, you may want to be conscious of the fact that you may have a hole or overspend in your budget that still needs to be addressed/fixed.

    Refinancing Debts:
    You may be able to refinance your existing mortgage, or vehicle or qualify for a debt consolidation loan.  What you need to remember is this method will improve your cash flow, but it will also cost you more interest and time.

    Spending Less:
    This is personal.  However, we can recommend a few simple techniques to help.
    – Turn your heat/AC Down a few degrees can easily add up to $50-$100/month
    – Monitor the number of groceries being thrown in the trash.  The average family of 4 can discard up to $500/month in groceries.
    – Review your subscriptions and streaming services.   Most people have 3 active and unused subscriptions.
    – Review your insurance (Life, house, vehicle).  You can shop around and review options.   Many households are wasting money on unnecessary or hefty insurance premiums.
    –  Thrifting or buying used – It is amazing what you can find on Kijiji or Facebook marketplace or at local thrift stores.   Remember when you buy second-hand that you are usually paying        about 25-75% less and not paying any tax.
    – Batch cooking at home – Scouring your weekly grocery flyers is a great way to save.   By your staples in bulk.  Cook in batches and freeze.   Soups, stews, chilis, casseroles, lasagna and meat all freeze well!.
    – Make your coffee at home.

    Earning More:
    Earning more money may be difficult for some.  However here are some ideas that may work for some extra cash:
    – Sell all unused appliances and household items on Kijiji, and Facebook Marketplace, or have a garage sale.
    – Are you able to rent out a room or bedroom on Airbnb or another Short-term rental?
    – Are you crafty or have a green thumb?  Can you sell any of your crafts (cards, soaps, etc) or are you able to sell house plants that you grow yourself?
    – Are you able to find a better-paying job in your industry?
    – Can a stay-at-home spouse start working part-time?

  5. Don’t punish yourself.   You do deserve recreation and social life.  Over the last 25 years, I’ve really noticed that people really try to punish themselves.   They cut their spending cold turkey (NO STARBUCK, NO EATING OUT, NO NOTHING).  It’s the wrong approach.   Try doing a few things that you may not notice and start weening yourself off your bad habits.  For example, you get coffee and a muffin every day before work.   Try only going 2-3 times per week and maybe cancel the muffin.
  6. Set goals.  What are your goals going to be?  Short Term, Medium Term, and Long Term.  When setting goals, always use the SMART principle and make your goals

    Specific – I want to go on a vacation – could be I want to go on a 1-week vacation to Puerto Vallarta and stay at an all-inclusive resort on the beach.
    Measurable – What is the average cost for this time of trip – How much do I need to save per month for this goal?
    Attainable – Do I have enough time to make sure that I can reach my goal or do I have enough extra funds to make this happen?
    Reasonable – What can I reasonably afford, Can I still have an amazing time and not have the most expensive suite or flight upgrades?
    Time Specific – Can I reach my goal in the amount of time I have set aside?

  7. Include your family.  Budgeting should be a family activity and requires the family’s buy-in.
  8. How much are you paying in interest and how are you going to pay off debts?  Debt is necessary.  However, most families that I have helped over the years have been bowled over by the amount of interest they pay each month.   How much is it?   However, excessive debt and spending need to be curtailed.   If you have decided to refinance and have eliminated that consumer debt, what are you doing to not let it happen again?   If you are unable to refinance, how are you planning on paying off the debt?  We recommend using a technique called debt stacking.  This technique suggests that you pay off your smallest debt first.  Once paid, you would then take the payment that you were making on the smallest debt and then apply it to the next smallest debt.
  9.  Check your mindset.   At this point in the process, you may be horrified, and it is OK.   Everything is fixable.  How are you feeling?   If you are feeling motivated carry on.  If you are discouraged revisit step 4 and really decide on how you’re going to work within your budget.
  10. Get a coach!  Do you need to bounce ideas plans and budgets off someone – team up with a friend or relative to stay accountable or hire us to help!  We don’t charge and are hear to help.  We do hope that you will consider us for our mortgage, insurance and other financial services.