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my money coach

Budget and debt – Part 1

by Tim St Vincent

Budgets and debt. These are two things that Canadians seem to be afraid of. We don’t have nearly enough of the one, with only 50 per cent of Canadians having a budget. The other we have far too much of, with total Canadian consumer debt at $1.72 trillion. Within this combination, the Canadian Payroll Association reports that almost 50 per cent of working Canadians are living pay cheque to pay cheque.

These are scary numbers and there are many more. Debt weighs heavily on the minds of Canadians with 35 per cent of us feeling overwhelmed by debt.

Overwhelmed. That is a very strong word. It means that debt isn’t an annoying little itch that we can’t get rid of. No, it is a loud booming voice inside our heads that won’t leave us alone. Fifty per cent of employees feel that financial stress is impacting their performance at work. The average employer loses about three days of productivity per employee per month. That means for every 10 employees they are losing the equivalent of a month’s work. Financial stress is an issue for employer and employee alike.

If debt is so all-pervasive, why then do we do nothing about it? Why do we not address it? Perhaps it is because there is something out there that we fear just as much, or perhaps even more: budgets. With only about 50 per cent of the country having a budget, it appears that we fear budgeting as much as we fear our debt issues. In a way, this makes sense because the two do go hand-in-hand, but not in the way many may think.

Let’s think about this for a minute. There are a lot of stats that I just quoted around the 50 per cent mark. The most important I feel is that only about 50 per cent of us has a budget. If that 50 per cent were to learn how to budget, then I have to believe that all of those other scary numbers I just mentioned would go down substantially.

Then why don’t we budget? At some level we realized that by budgeting we will learn a hard truth: for all of those years when we didn’t have a budget, we weren’t in control of our lives; our money was. It was our money “telling” us what we could do and what we couldn’t do. Our money was in control of us, and that is a hard truth to face. Budgeting will also show the sometimes-hard truth of what our true financial situation is. Fifty-one per cent of us lie about our finances. We lie to our partners, we lie to our advisors, and we lie, most importantly, to ourselves. Sometimes we don’t want to know the truth.

A budget isn’t something to be afraid of; just the opposite. A budget will put you back in control of your finances. It stops money from telling you what you can and can’t afford and puts control back in your hands by telling your money, through planning, what it will do for you. Many people fear budgets because they see it as a loss of control; they want to spend and enjoy their money. When people express this concern to me I ask them one simple question. “Ultimately, what do we do with the money we save?” After sometime someone usually, cautiously, suggests “spend it?” “Exactly!” I say. We save money for one reason and for one reason only: to spend. We save to spend. And the only purpose of a budget is to help you save, so that you can spend. It is not a barrier to spending; it is a critical aid to spending. A budget exists so that you can spend; so that you can spend and enjoy your money, so that you can spend wisely and plan for your future, and potentially the future of others. A budget exists to help you spend. Period.

One of the most important things to realize about budgets is that the toughest part isn’t dealing with numbers – numbers are the easy part. Most people can do the math. If you have challenges with the math, you can use calculators or spreadsheets. We have a great one at, under tools. The hard part is understanding your relationship with money, and yes, you do have a relationship with money. Like most relationships there are good parts and not-so-good parts. We need to identify the not-so-good parts and adjust our behaviours. We need to form new patterns and new behaviours. That is the tough part.

So then how do we know which parts of our relationship with money need to be adjusted? It all starts with tracking our expenses. A budget without tracking isn’t really a budget; it is a wish list. That is all a budget without tracking; a list of wishes and hopes. It expresses how you “hope” you are spending your money. Last time I checked, hoping doesn’t pay the bills. You must track your expenses and it is the reality of tracking that will give the truth to your budget. I often tell people that budgets and tracking are like a married couple. They have to talk to each other; to communicate. That means that sometimes they “fight” when the reality of tracking doesn’t meet the expectations of the budget. But that is a good thing! That gives you a starting point and tells you where you need to make changes. If tracking says you are spending your money one way, but your budget says it should be spent another way, well then, you have found an item in your money relationship that needs work and correcting!

Next month I will continue this conversation and we will talk about a basic behaviour that is very important to successful budgeting. Pay yourself first. Until then, spend wisely!

Tim St Vincent is a retired CFP and is a Certified Educator in Personal Finance with the Credit Counselling Society, a non-profit organization. If you wish to contact the society for further information, assistance or to attend a webinar, please call 1-888-527-8999 or visit or

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