Estimated reading time: 14 minutes
Learn the importance of a family budget and how it can positively impact your debt and savings ability.
Discover different budgeting approaches and get started with our free budget Excel spreadsheet.
A Family Budget Showed Us What We Missed Out On
There was a time when we were not using a family budget, and now we look back at its effect on our debt and savings ability.
A typical household budget has everyday budget categories and can be completed in various ways.
We chose the zero-based budget approach using our free budget Excel spreadsheet I designed years ago.
Let’s go back to when there was no family budget and how we managed to get by with our money.
It wasn’t until we were married and in our early 30s that we started to read up on budgeting 101.
As you may be new to the world of budgeting, we had to research the family budget.
Some common questions we wrote down before searching the web gave us the needed answers.
These are the questions I remember, but over the years, we’ve always learned by experience and education.
This is why our Excel budget spreadsheet has been our financial bible for many years.
At one point, we used a printable family budget but later found it easier to use Excel as we could add formulas for more data collection.
Not everyone cares about the nerdy data like we do, but a mobile budgeting app or Excel spreadsheet is the way for those who do.
Let’s look at some of those questions and answer them below.
Common Family Budget Questions For Beginners
- What is a home budget?
- How do we create an Excel budget spreadsheet?
- Why do we need to use a family budget?
- Will budgeting help get us out of debt?
- Using a budget, can we save enough for a 25% downpayment on a house?
- How many budget categories do we need?
- What do we include in our family budget?
- How to make a budget binder?
- How much should a grocery budget be?
- Do we need emergency savings?
Best Types Of Budgets
There are many types of budgets to use that I may not have listed, but these have all been discussed in Canadian Budget Binder.
- Cash Budget
- 50/30/20 Budget
- Basic Budget
- Zero-Based Budget
- Magic Jars Budget
- Envelope Budget
- Irregular Expenses Budgeting
- Retirement Budget
6 Consequences Of Not Using A Family Budget
As we’ve learned over the years, there were consequences for us when we did not use a family budget.
Learn lessons and educate yourself from bloggers or professionals who understand finance and have applied it successfully.
1. No Financial Documentation
When you don’t have a family budget, you’re likely not tracking your money and have little to no documentation.
Even if you keep receipts, there is still no organization in the money coming in and going out.
Now, if we want, we can go back to 2012 when we started budgeting, created our free Excel budget spreadsheet, and reviewed it.
Keeping a financial trail of your money is a big deal, especially if you need to reference an expense or debt for future dealings.
2. Net Worth Not Recognized Properly
We had no idea what our net worth was before using a budget.
This type of financial knowledge would have motivated us further had we known.
For example, knowing your net worth would prompt you to find a better way to pay it off if you were in debt.
Now, we calculate our net worth every month to have our net worth numbers at our disposal.
Seeing how our net worth has increased since we paid our house and debt off is astounding.
3. Debt Was A Guess
We had no idea the exact amount of debt we owed.
Yes, we had money in the bank for a house downpayment but were not utilizing it correctly.
Our minivan was not paid off; we should have paid it off in total, even though the loan had zero interest.
Budgeting for us allowed us peace of mind, and getting rid of the debt fast was our goal.
We also had to pay rent but received no rent receipts and did not have renters insurance.
We found that the more research we did, the better it was for us to get ahead.
4. Missed Savings Opportunities
Any time you are not budgeting, you miss out on savings opportunities.
Why? If you budget your numbers correctly, it allows you to see where your money is going.
Perhaps you’re spending too much on entertainment and eating out, soaking up too much of your finances.
For example, your clothing allowance may be over budget, but you won’t know it without a budget.
Over the years, we could have invested more in our RRSP and TFSA had we started budgeting earlier.
Sitting on the money was safer, but now we know that maxing out our investments is smart.
No budgeting = missed savings opportunities and a visual of your income, debt, or debt-to-income ratio.
The numbers are the most essential part of your family budget and are crucial.
5. Not Knowing Where Our Money Went
Without a family budget, we had no idea where our money was going unless we asked for receipts.
We did not ask for receipts at the time, as we do now for just about everything, so we can file it for our end-of-month budgeting updates.
Guessing where your money is going or forgetting that all the little expenses add up can put people into debt fast.
6. Financial Stress and Insecurity
When you don’t have a family budget, it can cause you financial stress and insecurity because all you see is what’s in your bank account.
You won’t know if you will be safe if you were to be let go from work, health issues, or in an accident that left you without income or short-term disability.
Sometimes, if you’re hurt at work, the WSIB takes forever to figure things out, which means that you will end up paying your benefits company back when WSIB kicks in.
To ease financial stress, we found that using a budget we created out of a need for peace of mind made a world of differences.
There are so many budgeting apps, free budgets, and types of budgeting systems online that you can experiment to find one that fits your needs.
Let the stress of money and debt roll off your shoulders and into a budget to release the anxiety that so many Canadians face with cash.
According to the Scotiabank Financial Worry poll, Canadians aged 18 to 35 worry the most about their finances, logging 2.4 hours of self-reported anxiety each day. (That’s equal to about five weeks straight of worry annually.)
People aged 35 to 54 worry a little less — an average of 1.8 hours a day, which still totals almost four weeks of annual financial anxiety.
Older Canadians, aged 55 and up, sleep a little easier, but they still worry about their finances around 1.4 hours per day – enough time to enjoy a movie instead.
Source– Financial Post
You’ve got the tools. All you need is the motivation to budget for a debt-free life.
You Need A Family Budget
A family budget could mean many people or just one person.
From my experience, a budget is a budget no matter how many people bring in the income.
Whatever you do, create a budget, and if you are worried or scared about budgeting, I’m here if you need to ask questions.
I’m not a professional financial advisor, but I have 12 years of experience blogging and using budgets, which counts for something.
If you’re uncomfortable asking questions, talk to your financial advisor, bank, or other financial institutions you deal with.
Discussion: What lessons have you learned now that you used a budget you missed out on before taking control of your money?
Please leave me your comments and experiences below.
Mr.CBB
Family Budget Income Report October 2020
Hi CBB readers,
October was a busy month financially as we spent quite a bit in the health and beauty section and healthcare.
Mrs. CBB took advantage of PC Optimum points and scooped up almost 90,000 this month, which helped.
Mind you, we have nearly 6 million PC Optimum points, which we plan on using in 2021 for groceries. (we think)
Our son attended his first session with an eye specialist, and we paid for his soccer and Costco membership.
It’s a case of everything hits you all at once.
A birthday was also celebrated, and I traveled back and forth to my mother-in-law’s house.
That meant coffee stops at Tim Hortons and McDonald’s.
We also made a few pit stops at second-hand shops to buy some long-sleeved shirts, winter pants, and jackets for the family.
I also found a scooter for our son for $5.20, which I thought was pretty good compared to its retail price of $89.99.
As I mentioned in a previous post about the city inspector coming through, I’ve been finishing the basement slowly.
About every month, I spend money to complete that job so he can approve me to move forward.
There’s never a dull moment with a budget, but thankfully, we use one to know where our money is going.
See you in November for our update.
Below, you will see all of our November family budget data.
Mr.CBB
Home Budget Percentages
Our savings of 41.96 % include investments as well as any savings for this month based on the net income of $10,394.54
We save money in our projected expenses for things that must be paid for in the coming months.
All categories account for 100% of our income, which shows that we accounted for all our income in October 2020.
This type of budget is a zero-based budget where all the money has a home.
Monthly Home Budget Expenses
Below is a breakdown of our expenses, which helps us understand where our money goes.
- Chequing– This is the bank account where all our debt gets paid. We use Simplii Financial, TD Canada Trust, and Tangerine Bank.
- Emergency Savings Account– This is a high-interest savings account.
- Regular Savings Account– This savings account holds our projected expenses.
- Monthly Budgeted Total: $6392.68
- Monthly Net Income Total: $10,394.54
- (Check out our Ultimate Grocery Guide to see where our grocery money goes)
- Projected Expenses: These are expenses we know we will pay for throughout the year = $852.91
- Total Expenses Paid Out: $8162.54
- Total Expenses Paid Out: Calculated is $10,394.54 (total net monthly income) – $852.91 (projected expenses) – $1379.09 (savings to emergency fund) = $8162.54
- Actual Cash Savings going into Emergency Savings: Calculated is $10,392.54 (total monthly net income) – $8162.54 (actual expenses paid out for the month) – $852.91 (costs projected) = $ 1379.09
Monthly Budget and Actual Budget
Below, you will see two tables; one is our monthly budget, and the other is our actual budget.
Our budget represents two adults and a 6-year-old son, plus retirement investments.
Budget color chart: If highlighted in blue, it is a projected expense.
Since May 2014, we’ve been mortgage-free, so much of our money will be directed at savings, investments, and renovations.
I appreciate that you enjoy this budget update each month.
Still, I hope you view this as an educational tool rather than comparing your financial numbers, as our situations are unique.
Spending less than we earn and budgeting has been the easiest way for us to pay down debt and save money.
Monthly Family Budget
Actual Family Budget
2020 Home Budget Challenge
October Update: We are still two players for the Budget Challenge 2020.
These two budget challengers will ride it out until the end of 2020.
Let’s look at what happened with their monthly budgets in October.
Budget Challenger #1
October…we are back to the soup season!
I love the fall and winter because we make oodles of cheap, healthy, homemade soups.
We can cook 4-6 times throughout 30 days and eat well for the entire month!
It is very economical regarding our time, the cost of our utilities, and the actual cost of our groceries because I tend to focus on beans, lentils, cruciferous, and root vegetables.
I adore soup and am incredibly grateful that my hubby sees it as supper material as long as he gets some bread, muffins, salad, or something to stretch the size of his meal.
BIG bills are coming fast and furious…the house and travel insurance invoices are here now.
Our BCAA membership renewal, the service contract on our furnace and heat pump, and the condo fees and taxes on our timeshares are all due before the end of the year.
Every nickel I don’t have to spend will happily get moved into our FUTURE PAYMENTS ACCOUNT.
I guess replenishing the EMERGENCY ACCOUNT after our subsequent medical expense borrowing will have to be temporarily placed on hold until 2021.
We’ll get there, but not nearly as quickly as I would have liked.
Thank goodness we have paid back the initial borrowing for the Apple Watch and iPhone.
Fortunately, I haven’t had to draw the funds for my 2nd round of medical expenses yet.
I am waiting for our extended health coverage approval to determine the portion of my purchase of a CPAP machine and all the assorted supplies.
However, I expect that to happen next month, but for now, the cash sits in the EMERGENCY ACCOUNT.
Budget Challenger #2
Hi everyone, happy November!
October wasn’t a bad month for me, though I am embarrassed to say how much I spent on fast food.
I’m usually embarrassed to write this, but I’m extra embarrassed this month.
For October, it was an extra pay month, which was awesome, gotta love those.
However, I’d call it a win if we couple that with no house payment or unexpected bills.
Household Bills
- Fast Food: 135.93
- Groceries: $324.50
- Phone: $59.99
- Land tax $398.00
- Car payment: $304.98
- Power $140
- Savings short term: $200
- Car/house insurance: 144.53
- Netflix: $9.99
- Spotify: $15.99
I believe I have one more car payment, and then it’s all paid off, which I’m thrilled about.
My car was inspected, so I’m good to go until 2022! Hopefully, the car will last that long.
My goal is to save for a new car and be able to pay at least half of the cost in cash.
Because it was an extra pay month, I was about to put about 1.5 paychecks away for long-term savings.
I need to reach out to my bank and figure out my RRSPs.
Oh, and I used my air miles to get a Kitchen Aid mixer for free, so that was awesome.
I’ve wanted one for a long time and decided to save points to get it.
I probably had enough points two years ago but decided to save for vacation instead.
Since vacations can’t seem to happen right now, I figured I’d use some of my points and get it, and then keep saving for when travel becomes a reality again.
That’s it for me this month!