From Chaos to Clarity

Automate and Systematize Your Budget.

Everyone knows what a budget is. It’s like a diet—people know they should do it, but putting in the work is tough. I’m going to show you how to systematize and automate your budgeting so it becomes second nature, and you won’t even have to think about it.

Budgeting

Let’s start by identifying your fixed expenses, such as rent or mortgage payments—any ongoing recurring payments. We want to automate these using online bill payments, e-transfers, or manual online banking.

Next, we have variable expenses—like groceries, clothing, and transportation. I recommend using cash exclusively for these, as I classify them as psychological funds.

Now that you understand fixed versus variable expenses, write them down—whether on paper, in an Excel spreadsheet, or YNAB. Once categorized, cross out the paid fixed expenses in your monthly or biweekly budget, which will leave your variable expenses. Take the cash allocated for these and put it into envelopes labeled with the corresponding categories. This method helps you feel the financial impact of your spending.

Ultimately, the goal of a budget is to create a surplus for paying down debts or reaching savings goals. This is how you get ahead—you can’t neglect the fundamentals.

Liabilities

Debt products like credit cards, lines of credit, and loans can be very dangerous, and I wouldn’t recommend relying on them. Personally, I have an 800 credit score and just one credit card with a $500 limit for my phone plan, which I’ve kept intentionally low. These products can cripple governments, corporations, and individuals alike.

I’m serious: close any lines of credit, cut up your credit cards, or freeze them in a cup of water—avoid these products at all costs. While they can be useful for student loans and mortgages, if you don’t have a specific need, it’s best to steer clear.

Assets

I wouldn’t recommend investment products like TFSAs, FHSAs, and RRSPs until all debts and liabilities have been paid off. However, once you’ve reached that point, you’ll gain a significant advantage over your peers. In future articles, I’ll go into more depth about these accounts.