Written by Will MacLaughlin and Amy Ghaboush
Many things in life are beyond your control. But there are things that you can do that will make a difference.
Personal budgeting is one of those things.
Foundational to personal budgeting is the recognition that the financial choices you make today will inevitably impact your future, either opening or narrowing options for that future you.
What you do—or don’t do—today matters.
Some personal budgeting tools might change over time. (You’ll probably hear more about budgeting apps than cash envelopes these days.) But the basic principles of budgeting have not changed.
And it is so important to feel confident in your ability to budget, especially as the cost of living continues to increase and you wrestle with student debt.
As for me: I’m someone who has thought a lot about budgeting. I’ve lived on tight budgets. (Once upon a time, in a bygone era, I was a student too!)
And through my work with a charity called Christians Against Poverty Canada, I’ve also helped others create affordable budgets for themselves and feel in control of their finances. We also offer fully accredited credit counselling to help those who have become overwhelmed by debt.
I’ve learned a thing or two along the way that you might find helpful.
So let’s dive in!
Your finances might feel like a bit of a mystery, with money coming in and out of your account regularly. You could just hope it all balances out.
The reality is that, until you lay out all the items coming in and out, it will be difficult to have a clear picture of what is in your hands and what you have control over.
Getting all of the pieces of the puzzle out on the table is exactly what a budget is. It’s not something theoretical but tangible. It names things you can see and hold on to.
It can also show you your values and goals. It can give you clues to changes you might like to make in your life.
A budget is there to serve you, not judge you. Used well, it will do just that: serve you and add value to your life.
Without a budget you will not know what you can and cannot afford. It’s as simple as that.
I’ve personally sat with families as they’ve created a budget and seen the shock on their faces as they realize that they had more disposable income than they thought—enough money for projects and holidays that they’ve been wanting for years.
What starts as a dull and boring budget could give you opportunities and confidence to dream, plan, vacation, or whatever your heart desires. Dull and boring could actually become something quite spectacular for you!
Budgets can easily be changed and adapted depending on circumstances—you might have just landed your dream job or you might be studying and working part-time.
Either way, build your goals into your budget, and you are more likely to reach them.
If your goal is to own a Tesla, take a trip to Rome, or start your own business, NOW is a great time to start budgeting and saving.
So you might admit, whether wholeheartedly or grudgingly, that there’s a need for a budget. Congratulations! Here are some top tips to give you confidence as you build your budget:
Before getting into the numbers, consider how you want to live. Here’s how The Message paraphrases Paul’s call in Romans 12:1:
So here’s what I want you to do, God helping you: Take your everyday, ordinary life
—your sleeping, eating, going-to-work, and walking-around life—and place it before God as an offering.
What does it look like for you to offer your money to God?
- If you love giving gifts, you’ll want to build that into your budget.
- If hosting is your jam, then a grocery budget to match is going to be essential.
- If you want to visit family and your job’s taken you further afield, your travel budget might be higher.
Knowing why you’re spending money is incredibly important because it allows you to be proactive, and to live into your values and who God is calling you to be. You might decide not to buy that coffee every work morning, because you want to save up for a vacation. Feeling content in that decision will help you stick to it.
Why not take a look at your bank statement and ask yourself, “What does it look like I value?”
When your spending and your values align, you won’t feel that sense of guilt that too many of us experience when we spend money on things that don’t add value to our lives.
And when we do feel guilt? God walks with us as we wander.
As we start to build our budget, it can be surprising to see where all the money goes.
For example, say someone writing a blog on finances noted that they bought a certain popular coffee chain’s coffee every morning on their way to work (260 days x $3 = $780/year). That would be something to pay attention to in our new budget.
Try using a budgeting app that makes it easy to see what money comes in, where it is spent, and how much you’ve got left. There are many apps and websites on the market. They can be really helpful—especially if math was something you were desperate to avoid! Here’s one from The Financial Consumer Agency of Canada.
Many banks—including free online ones—also provide budgeting tools. Find one you like and go for it.
Separating your money into four different pots is a great way to stay in control:
- Recurring bills
As long as you stay within your allocated weekly spending, you’ll know you have enough to last.
You’ll also be able to revisit areas when you have overspent and work out if you need to make adjustments.
1. Regular bills
It’s a great idea to use a separate bank account for all of your regular bills (the expenses that recur, like rent or subscriptions). That way, when money comes you can move the amount needed for the month straight into your “regular bills” slot. Then you’ll know you’ll have enough for each bill.
Where possible, set up pre-authorized debits for each of these bills.
And make sure you leave your bank card for this “regular bills” account out of your wallet when you’re shopping, so you don’t dip into those funds “by accident.”
2. Spending money
Some of us find spending money hard. Some of us find it far too easy.
As you begin to look at your values and where you want to spend your money, you may realize you need some guidelines to keep you on track. And so to avoid the dreaded overspend or spender’s guilt, you could try to use cash only to curb and limit your spending.
But if cash sounds too prehistoric, then how about a prepaid credit card? These can allow you to add a finite amount of cash to it via e-transfer, setting limits on your retail therapy. An online search will bring up a number of great—and free—prepaid card options.
Remember, you are still in control of your guidelines and your limits. Strategies to guide your spending are about giving you confidence and freedom, not about limiting you.
For some of us, saving can be a real challenge. But in the long term, it helps you prepare for unforeseen circumstances.
Do you need to create a retirement or health plan? Or does your employer offer a sufficient benefits package? If your workplace offers pension support or health insurance, making use of these benefits can have a massive impact on how much you need to save. Make sure you know what your benefits are. If your employer offers matching contribution programs, make the most of them.
Why not set a goal to save for an emergency fund? Think about how much you spend in a month and save enough for two months, or more if you like. This fund could be used if you lose your job or if you’re off work sick. This fund can be a great confidence booster, especially when everything seems so uncertain.
Please please please, also save for fun things, not just your pension or health or emergency. Save for the spectacular, save for that trip to Switzerland. Make it a priority to save, not only if there’s enough money left at the end of the month. Even if it’s $20 a month in savings, if it’s in your budget, you’ll have money available for when it’s needed.
This may all seem like a stretch on a low income, but you won’t know what you can achieve until you set your goals and create that budget.
What about giving back?
There are so many people that need help and support, across the world and also close to home.
As Canadian legend and theologian Ron Sider says: “No one can do everything, but everyone can do something, and together we can change the world.”
That could be a small monthly or yearly donation to organizations working hard in their local communities. Even small amounts add up and make a difference.
Adding a giving line to your budget will not only make you feel better, but I promise you it will have a huge impact on whichever organization you wish to support. Christians Against Poverty (CAP) receives many monthly donations of $5. Although some would say, “How is that going to make a difference?,” the consistency of these gifts is incredibly helpful.
And hey, charitable donations = charitable receipts, so come tax season you can happily accept that charitable tax receipt and give yourself a huge pat on the back for your contributions.
Read more about budgeting for gifts: How do I manage money as a student?
As you budget, consider what’s coming into your bank account. How might you maximize your income?
Make sure you’re not missing out on anything you’re entitled to in grants or supports. Are there existing benefits you could access?
Could you also look at additional part-time work to bring in some extra cash? Or consider being creative in tutoring or mentoring in an area of expertise?
Now this can be a tough one. I think everyone who has or has had a student loan would tell you the same thing. After putting in all that hard work to grow your big beautiful brain, you are immediately tasked with more hard work of paying off loan(s). Ouch.
Here are some suggestions.
Educate yourself. Before you get a loan, or even if you already have one, make sure you have a full understanding of what will need to be paid off and when. Here’s a resource about paying back student debt from the Canadian government.
As always, seek professional financial advice, whether it’s before you get the loan or if you’ve already got it. A financial advisor will be able to advise you on repayments too.
Lastly: take a deep breath. The $$ numbers and time it will take to pay it off can be daunting. You are going to be okay.
In fact, you are already a step ahead just by making a budget, as 51% of Canadians have never built one. Well done, you!
Whatever the dollar amount that rolls into your bank account: you are not defined by that figure.
You are immeasurably more than those numbers.
- Whether you’re on a challenging, tight budget.
- Whether the job you find yourself in pays incredibly well.
- Whether you’re struggling to find a job at all.
I always say to those I work with through CAP that I feel privileged to be part of their journey. And that no matter their financial circumstances, they matter to God, and to me.
The same is true for you. You are not your budget, but a dearly loved child of God.