Most powerful tool in your financial toolkit: a budget
What is a budget?
A budget is a plan that helps you manage your money and avoid getting into financial trouble. It lists all of your income and expenses, and gives you a snapshot of your financial situation.
6 reasons why a budget is your most powerful tool
- Allows you to stay on track – a budget helps you track money coming in and going out.
- Reduces stress – if you manage money and credit wisely, you can avoid financial surprises.
- Helps you identify what is important – a budget helps you distinguish between needs and wants.
- Avoid debt – create a budget, you are more likely to follow it and avoid unwanted debt.
- Save for tomorrow – a budget helps you plan and save for an important financial goal, like your children’s education or an every day goal like a new appliance.
- Be ready for surprise expenses – a budget helps you plan ahead and put money aside for emergencies or unexpected expenses.
Easy steps to make a budget:
To help you get started, use the Financial Consumer Agency of Canada’s budget calculator.
- Get organized – Record all of your expenses so you know where your money goes and where you can cut spending.
- Identify your short-term and long-term goals, and build saving for them into your budget.
- Divide your expenses between things you need (e.g. groceries) and things you want (e.g. tickets to a concert)
- Make “being debt-free” one of your goals – List all of your debts with interest rates and track your progress in paying them off.
- Pay more than the minimum payment on bills whenever you can
- Stick to your plan – Learning to stick to a budget can seem difficult at first, but the more you use your budget, the easier it becomes.
Managing Money and Debt Wisely: It Pays to Know!
Find helpful tools and resources at Canada.ca/Financial-Literacy-Month.