managing-money-and-debt-wisely

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

  1. Allows you to stay on track – a budget helps you track money coming in and going out.
  2. Reduces stress – if you manage money and credit wisely, you can avoid financial surprises.
  3. Helps you identify what is important – a budget helps you distinguish between needs and wants.
  4. Avoid debt – create a budget, you are more likely to follow it and avoid unwanted debt.
  5. 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.
  6. 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.