B is for budgeting

A budget is a tool that helps you plan your expenses and income. It gives you an idea of whether you tend to be under every month or whether you can afford to set a little aside.

Ultimately you should aim to save about 10% of your total income every month.

There are several ways to make a budget:

• You can use an online budget calculator (available on financial institution websites, government websites, or financial organization websites) or a mobile application.
• You can use a notebook to track your spending and income.

The goal is to track all your expenses and income over a given period and then add them up to see where you stand.

Categorizing your expenses can help give you a clearer picture.

To easily draw up your budget and have accurate picture of everyday income and expenses, use the My budget tool.

Advantages of creating a budget

• Encourages saving
• Reduces stress
• Makes it easier to prioritize
• Helps you manage your money and expenses
• Prevents you from sinking into debt
• Encourages you to set aside an emergency fund
• Keeps you from making financial blunders

Why budgets sometimes fail

• Estimated data
• Incomplete calculations with limited detail
• Unexpected expenses
• Spending in cash not accounted for
• No savings plan for future goals

Financial advisors work to grow their clients' portfolios according to their objectives and risk tolerance. Financial advisors have certain financial knowledge and skills to help them in their work. They are usually employed by a financial institution or organization but don't necessarily sell the financial products offered by their employer.

Desired qualities

• Competent
• Honest
• Attentive to their clients' needs and goals

Roles

• Guide clients in developing and attaining their financial goals
• Provide estate planning and management services to clients
• Advise clients and direct them toward investment products that meet their profile (real estate, stock market, insurance, etc.)
• Develop a financial plan according to their clients' budget, needs, objectives and priorities

A financial plan includes:

• a personalized analysis done by an advisor
• tailor-made strategies, sound advice and solid recommendations
• a comprehensive action plan with timeline
• ongoing service and support from an advisor

Financial advisor career path

Financial advisors must successfully complete certain courses to become authorized to sell mutual funds.

Many financial institutions require their advisors to be trained in financial planning.

Financial advisors may also follow the required steps to obtain the professional designation of financial management advisor.

There are many ways to track your spending. You can:

• use your account statement
• collect all your bills, receipts and unbilled expenses in a box
• use a notebook or planner to record purchases
• install an application on your smartphone

Using a debit card for purchases allows you to keep your money safe in the bank and track spending using an account statement.

Creating a budget

• Determine how much you need to allocate to each expense category.
• Use monthly account statements, record invoices and review pay stubs.
• Calculate your total monthly income and expenses.

Read the Budget article.

Compare your budget to your actual expenses:

• If your income is higher than your expenses, invest or save the monthly surplus to work toward your goals.
• If your expenses are higher than your income, you're in debt or you risk sinking into debt if things continues as they are.

When your expenses are higher than your income

Find ways to reduce your expenses or increase your income. At a minimum, your expenses and revenue should balance out.

• Cut out any non-essential expenses.
• Reduce service charges applied to banking transactions (contact your financial institution).
• If you still need help, find a way to boost your income (higher salary, second job, etc.).
• Change your consumption habits. Read the article on Responsible consumption.

Building up an emergency fund

• Use it only in case of emergency.
• If you use it, build it back up right away.