The financial demands and other enticements placed on you necessitate that budgeting become an integral part of your financial management. The increasing financial needs of your children attending school or recreational activities; increasing costs of owning and operating a motor vehicle; and the uncertainty whether interest rates will rise are some of the issues you may be facing.
The development and monitoring of a household budget will help you to manage your money so that you can meet your day-to-day living expenses and will also prepare you to absorb financial surprises that may come along, such as a significant automotive repair or having to purchase a laptop computer or tablet for your son or daughter’s education. No matter how we plan for things in life, there is almost always something that comes along that requires us to absorb an unexpected expense.
The process of developing and monitoring a budget may seem like a daunting task, but it need not be. The essential elements of most budgets will be your anticipated sources of income (after-tax employment income; child tax benefits; GST tax credits, etc.) and your day-to-day living expenses including mortgage, loan and credit card payments.
Your budget should also contain a savings component to meet your long-term goals, such as retirement and an emergency fund for those unexpected payments that may come along.
If you are experiencing difficulties in developing a budget, there are various resources available to you that will make this task easier. There are some user-friendly software applications dealing with money management as well as numerous smartphone applications that may be of assistance to you. In addition, the financial institution where you bank may have some applications for this purpose.
Alternatively, your financial advisor or a non-profit credit counselling service, such the Community Financial Counselling Services, may be able to assist you to develop a budget.
Regardless of the resources used to develop a budget, it will only be a useful tool if you diligently monitor your spending and stick to the budget. The “needs” and “wants” assessment needs to be considered when you make purchases. The emergency fund you include in the budget will hopefully be enough to absorb the financial surprises you encounter.
If your financial situation is such that you need to file an assignment in bankruptcy or a consumer proposal to deal with some debt problems, the trustee in bankruptcy will provide you with two financial counselling sessions to provide you with a foundation to plan and control your finances in the future. The subject matter of these sessions includes budgeting, monitoring spending habits, obtaining and using credit and warning signs of financial difficulties.
The above is not a complete treatment of the subject. Additional information can be obtained from your financial advisor, a representative of the Community Financial Counselling Services or a trustee in bankruptcy.