Where Do You Stand When It Comes To Budgeting

One of the first questions I typically ask my clients is this:
“When was the last time you drew up a budget?”

And the reply I usually get is:
“Um...”

And when I go on to the next question:
“Can you list all of your expenses over the past month?”

Again more often than not, the answer is:
“Um...”

If you don’t have the answer to these questions either, don’t be too hard on yourself as the majority of Canadians have not been very strict when it comes to setting a budget. However, if you want to build towards a strong financial future, budgeting is still the best tool to ensure you have control over your finances as you establish your short-, medium-, and long-term financial goals. Without a strong, comprehensive budget, you’re working towards nothing and could all too easily lose control over your finances.

I know all too well that effective budgeting is a thankless task which takes time, thought and significant effort. You may also think writing up a budget is a waste of time. After all, you know what your income and expenses are, right? I have no doubt that you can easily calculate recurring monthly expenses in your head like rent, electricity and cell phone costs. But do these expenses represent the entirety of your budgetary items?

Have you thought to add other regular expenditures that we all make, like your morning coffee, trips to the drive-through, noon-hour purchases when you forget your lunch or even just that Thursday evening out with friends?

It’s impossible to account for all of these expenses... which shows the importance of taking the time to go through this financial exercise. You will likely be surprised to find out the many places your money is going and how small purchases or spends can add up to large expenses when added up at the end of each month. Making small compromises here and there could free up extra cash to pay down debt and still get out and enjoy all that the summer has the offer.

I will agree, establishing a budget during the summer months isn’t exactly a dream activity. However, taking the time to establish a manageable budget will allow you to enjoy the rest of your summer, knowing you have a plan in place and won’t end up spending the rest of the year paying off summer debts.

If you need getting control of your finances and managing your debt, contact your local Licensed Insolvency Trustee. Together, you can assess your unique financial situation and come up with a debt solution that’s not only manageable, but gives you a fresh start and a debt-free future.