It’s a fact that people who are single don’t manage their personal budgets in the same way that a family does. Financially, families and single people don’t have the same mid-term or long-term goals. It is therefore logical that their monthly budgets are managed according to different priorities and are divided into different categories. In the context of a family, kids are a financial game-changer and their futures must be taken into account as early as possible, notably in the form of investment in an education savings plan!
An individual (or a couple) can have numerous sources of revenue such as: a salary or fees received as compensation for work rendered, one or more pensions, retirement plan payments, family allowances, unemployment benefits, rental incomes, alimony, etc.
A family budget refers to the ensemble of the above-mentioned revenues minus the total expenses of the individual (or of the couple) and their family. Usually, the budget is calculated monthly and requires sound money management.
Revenue mostly goes toward paying fixed costs, some of which vary in amount; some which don’t. They include rent, mortgage, food, clothing, various bills, subscriptions (cable, phone, internet), transportation, insurance, etc. But revenue also covers a host of other expenses, which can be quite numerous for people with kids; and therein lies the need to establish a reliable and detailed budget so that we may always have the funds at the ready for these expenses, and so that we can prevent unpleasant surprises.
To make a family budget, you simply need to be organized and have a good system for planning your spending so that it doesn’t exceed your revenues. Here are a few tips to maintain a balance between money coming in, and money going out:
There exist financial products to help you get the most out of your revenues like, for example, an RESP. To find out how an RESP can be integrated into your family budget, use our RESP calculator.
To assist you in establishing your family budget, the Canadian Federal Government has made a budget planner available to you. This tool can provide the guidance you’ll need in this endeavor.
You’ll note that your expenses are divided into three main categories: fixed costs (those that recur every month like rent, utilities, or phone), running costs (these include essential items like food, clothing, or transportation), and special costs (as their name implies, these are one-off, and often unexpected costs like special equipment, repairs, family events, etc.).
These categories allow you to get a better overview of your monthly expenses, and in turn, to plan better overall, and to anticipate unforeseen events.
Kaleido has also put a similar tool at your disposal. It was created by our partner who specializes in family finances, and it can be of great help to you in planning your budget, as well managing your finances effectively and easily.
The following is an outline of a few resources that we propose to help you establish your family budget.
There is no doubt that a well-managed budget allows you to get more for your money. It ensures that your spending is under control and that you save wisely for the future, whether it is for specific projects, your retirement, or for your children’s education. The less you leave to chance; the more you are in control of your money. Placing your money wisely can yield interest and government grants. And let’s not forget tax credits and other such benefits for which you may qualify. In short, your money can multiply!
For example, if you invest in an RESP, you qualify for a Canadian Education Savings Grant (CESG), which generates 20% to 40% of the amount contributed over a year to an RESP for an admissible beneficiary in interest, up to a lifetime cap of $7,200. A nice boost for your nest egg and another good reason to save up for your children’s education!
Don’t leave your finances to chance. You work hard for your money so you deserve to make it work for you and to get the most out of it. A well-managed budget is the key to being financially sound. It requires a certain amount of discipline, and at times, you’ll have to make some compromises, but in the end, you will be rewarded for your efforts.