Important Factors to Consider When Creating a Budget (or your Cash Flow Plan)

Important Factors to Consider When Creating a Budget (or your Cash Flow Plan)

Let’s get real here. Budgeting isn’t about living off rice and beans or saying no to everything fun. It’s about taking control of your money, so it works for you and being intentional with it. Here’s what you want to think about when setting up a budget that fits your life:

1. Know Your Income

Start with the money coming in. What do you earn? Consider salary, freelance gigs, side hustle money, rental income, dividends? Get clear on your total income so you know what you’re working with. If you’re commission based and have an unpredictable income, then skip this step and move onto your expenses. Then you can come back to this and figure out how much income you need to cover your expenses.

2. Understand Your Spending

Do a deep dive into understanding where your money is going. This activity is going to sting like a bitch, but it’s crucial. Break it down into:

·       Fixed expenses (rent, mortgage, insurance, car payments)

·       Variable expenses (groceries, gas, dining out)

·       Irregular stuff (vacations, holiday spending, vet bills)

3. Set Financial Goals

What are you working toward? Think short-term (weekend getaway), medium-term (new car), and long-term (retirement, buying a cottage, full financial freedom). These goals help shape your spending decisions.

4. Practice Values Based Spending

Not every expense is equal. Prioritize what’s important to you, your needs, your goals, and scale back where it doesn’t matter as much. You don’t have to say no to lattes and blowouts unless lattes and blowouts are getting in the way of something more important.

5. Build an Emergency Fund

Shit is going to happen. Make sure you’ve got ideally 3 to 6 months of living expenses readily available to you, so you’re not scrambling if life throws you a curveball. The best way to build an emergency fund is in a high interest savings account like what EQ Bank or PC Financial offers.

6. Pay Off Debt (Without Losing Your Mind)

If you’ve got debt over 7% interest, build a plan to pay it down faster than the minimums. It saves you on interest and gets you closer to financial freedom. You don’t have to be perfect, just consistent.

7. Invest For Your Future

Put money into things that build your assets up such as your savings accounts, RRSPs, TFSAs, RESPs, etc. Set up automatic contributions into these accounts if you’re at that point in your financial journey. A little every month adds up to a big pay off in the end (if you're investing correctly into those index ETFs that I talk about).

8. Check In Regularly

Budgets aren’t one-and-done. I get my clients to do one at the beginning of each year and then adapt as life changes. Had a new addition to your family? Going on a big vacay this year? Just bought a new car with higher insurance premiums? Do a regular review to make sure everything still makes sense and make adjustments as needed.

9. Use Tools That Help (Not Hurt)

Budgeting apps, spreadsheets, or even a notebook will work! The right tools make it easier to see patterns and stay on track without overwhelm.

10. Be Consistent (Not Perfect)

Just keep showing up. Budgeting is a habit, and it gets easier the more you do it (just like working out). Give yourself grace and stay focused on your bigger picture.

Need some accountability and a wee little kick in the pants to get your financial shit together? Reach out for your free assessment call to see how I can help in coaching.