Wouldn’t it be nice to have a plan in place of where you will spend your monthly income and how much you will put aside in savings?  A budget provides you with guidance on how much you will spend monthly on rent, food, gas, etc. to ensure you meet your basic needs.  A family budget should be created with input from the whole family to ensure everyone’s priorities are considered.

Starting to create a budget is the hardest part, so here are a few tips to get you going:

  • Make a listing of all sources of income the family receives monthly (wages, pension, Ontario Works, child tax benefit, etc.). Keep in mind that if you get paid bi-weekly, you will receive an extra paycheque two times a year. You may want to allocate paying periodic expenses (i.e. insurance, clothing) with these extra paycheques.
  • Make a list of additional sources of income that are received periodically (i.e. quarterly GST cheques).
  • Make a list of your expenses broken down by categories that make sense for you. A couple of categories may include:
    • Housing – mortgage payment, property taxes, rent, and utilities
    • Living – food, laundry, grooming, and clothing
    • Personal – entertainment, gifts, and donations
    • Transportation – car payments, gas, repairs and maintenance, and public transportation
      Write down the best estimate of how much you spend on each item.
  • If your expenses exceed your income, re-evaluate if you can decrease any expenses or need to increase your income (part-time employment, small jobs, etc.). Consider the difference between “needs” that are necessities and “wants” which are a desire and adjust your plans to spend.
  • If your income exceeds your expenses, then consider how much you want to put aside for savings for future financial goals or if you will allow yourself to increase some discretionary expenses (i.e. entertainment).
  • Keep track of every penny you spend for a couple of months to compare to your estimates above. You may find you spend significantly more or less on several of the expenses.
  • Re-evaluate the budget you created and make necessary adjustments to meet your family’s goals.

There are many great resources available to guide you through preparing a budget.  Take a look under the Resources tab of our website at www.freshstartnow.ca for budgeting tools, or the Office of the Superintendent of Bankruptcy provides templates and videos on preparing a budget at https://www.ic.gc.ca/eic/site/bsf-osb.nsf/vwapj/Insolvency-Counselling-Program-02-Budgeting-Module.pdf/$file/Insolvency-Counselling-Program-02-Budgeting-Module.pdf.

If you are really struggling to prepare a budget on your own, contact a local not for profit credit counselling agency (like Catholic Family Services at  https://creditcounsellingcanada.ca/locations/credit-canada-debt-solutions-st-catharines/ ) for assistance.

By Kathy Lenart – Insolvency Partner, Licensed Insolvency Trustee
CPA, CA, CIRP
Member and Secretary of the Ontario Association of Insolvency and Restructuring Professionals (OAIRP)
Canadian Association of Insolvency and Restructuring Professionals (CAIRP)