Create a Budget

Everyone has different categories in their budget. A great place to start is to go through your credit card bills and debit transactions and average out how much money you have spent in 3 months on each category.  Don’t worry, it takes a few months to work out the kinks of a budget, don’t give up.   Write down every source of income you have, salary, child tax benefits, and Kijiji or online sales.

You may feel that it is restrictive to be on a budget. We actually felt that way when we started too. Very quickly though we felt like it gave us permission to spend money.  When we started to get out of debt it was 10 years ago, and I was on a maternity leave and my husband was just starting his massage business and was self employed. We never would have spent money on ourselves, but the budget gave us permission to spend money on a movie rental. Yes, that’s how long we have been doing this when there was still a Blockbuster lol.  

We have an envelope for the following categories:

1.                   Date Night

2.                   Kid Activities

3.                   Power Bill

4.                   Frenchies/Clothes

5.                   Car (gas, repairs and if you have a payment or save for new car)

6.                   Groceries

7.                   Lottery

8.                   Miscellaneous

9.                   Insurance (pay annually for a discount, but continue to save monthly)

10.               Cell Phone

11.               Internet

12.               Toiletries

13.               Mortgage

14.               Entertainment

15.               Property Taxes (this needs to be paid 2x a year)

16.               Gifts

17.               RESP/RRSP/TFSA

At the start of each month we put cash in each envelope.  That's the money for the category.  When it's gone, it's gone. All the money that was left over and not put in envelopes we used to put on the mortgage as an extra payment.  You can use the extra to pay down other debt, or as a float the first few months when working out your budget. 

You can put your receipts in the envelope or jar if you want to.  If you are using an envelope you can write on the envelopes the amount and date you spent the money.

At the end of the month there are a few things you can do if money is left over.  You can allow the money to carry over and build up in the category. For example, the Power Bill is due every other month, this one builds up.

Groceries envelope, at month end you may realize you have some extra money to do build your stock pile. A stock pile is the extra food you have in your home.

Clothing, Gas and Date Night envelopes we don't let build up.

For a challenge we had an empty envelope purposely for month end. The last day of the month we would dump any left over money into it to be the fun money. This was how we afforded a get-away in a neighouring city for a night, or a movie dinner date.  After a while it became a challenge for us, and all money left over went on the mortgage.  Sometimes we skipped a date night and had an at home date. Then the money that was left in the date envelope was slapped on the mortgage. 

If you are saving for something special, say a vacation or a new purse, have an envelope. We used to keep our money in jars, but it got bulky and took up a lot of space. Jars are a good visual to be able to actually see the money, and how fast it is being spent. 

We have a page in our Home Economy Binder with each category of our budget written down.  We used to track what we thought we would spend, and the actual money spent in each category. It helped us to tweak out the budget.

If you are looking for an app try Dave Ramsey EveryDollar.  It is free and user friendly. I am old fashion and like pen and paper.

Here is a link to an online resource that we used when we were just starting out. http://www.gailvazoxlade.com/resources/interactive_budget_worksheet.html

You may remember Gail Vax Oxlade from the show Till Debt Do Us Part that aired on the Slice Network.

YOU WON'T BELIEVE THIS BUT TRY IT A MONTH AND YOU WILL SEE...Doing the envelope system makes us feel like we have more money.  It gives permission for us to spend money while keeping an eye on the prize. When we first started we used jars, so we could physically see the money, this is an option and may work for you.

Give yourself a few months to work out the kinks.  Don’t beat yourself up about it, you are making progress!

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