Course Content
Module 1: Income, Expenses and Budgets
Learn how to track your income and expenses and making a budget to start setting financial goals
Module 3: Saving
Learn the most effective tips and tools to help you save money
Module 4: Credit and Debt Management
Learn the types of credit, how to manage debt, review credit reports and credit scores
Module 5: Mortgages
Learn the costs of buying a home, types of mortgages and tips for negotiating your terms.
Module 6: Insurance
Discover different types of insurance, how they work and how to get the coverage you need
Module 7: Investing
Learn the basics of investing, types of investments, investment advisors and setting investment goals.
Module 8: Income Taxes and Contributions
Learn tax basics, taxable income, deductions, credits and filing your taxes.
Module 9: Retirement and Pensions
Learn about public and private pensions, personal savings and estimating your retirement income.
Module 10: Financial Planning
Learn the importance of creating a financial plan, estate planning and how financial professionals can help you.
Module 11: Fraud protection
Learn how to recognize and protect yourself from fraud, including what to do if you are a victim.
Personal Finance 101 Crash Course for Canadians
About Lesson

There are many ways to manage your cash flow and your spending. For some people, a paper budget works best. For others, a system in which money is allocated to different categories in advance is more practical.

This section presents systems for managing cash flow. In it you will learn:

  • how to compare income with expenses in a household budget
  • how to adjust your budget to balance it or even achieve a surplus
  • how to set up an envelope or jar system and allocate funds for different categories
  • how to keep your budgeting system up-to-date and realistic.

Do you have more money coming in or going out? To find out, you need to put your income and expenses together in a budget.

There’s nothing difficult about a budget. Nor does having a budget mean you have to sacrifice or do without the things you want. A budget is simply a comparison of income and expenses. It’s an organized way to manage your money.

You can use this template to prepare a simple personal or household budget. If you have already completed the income and expenses worksheets in previous sections, enter that information here. If you haven’t, take the time to calculate your total monthly income and your total monthly expenses.


  • Fixed expenses are those that come up every month and are roughly the same each month, like rent or mortgage payments, utilities, loan repayments and child care.
  • Variable expenses are those that may vary from month to month, like food, entertainment, travel, and home maintenance and repair.
  • Irregular expenses are those that don’t come up regularly or often, like car repairs or new appliances. To estimate irregular expenses, review your bills or expense records for the previous year, total the cost of irregular expenses in various categories, and divide by 12 to arrive at an average monthly cost.
  • Savings is an essential part of your budget. Financial experts recommend putting aside 10 percent or more of your net income each month to save for your goals and have funds in reserve in case you lose your job or face a major unplanned expense. Build up an emergency fund of three to six months’ income. Then continue to save for your other goals.


  • To determine your income accurately, you may want to collect recent pay stubs and income tax statements.
  • To determine your expenses, start with an estimate. Revise it after you have been saving receipts and bills or recording your expenses for a few months.

Is the difference between your total monthly income and total monthly expenses a positive or a negative figure? If it is positive, you have a surplus. If it is negative, you have a deficit.


  • Surplus: the amount by which your income is greater than your spending
  • Deficit: the amount by which your spending is greater than your income

If you have a surplus, congratulations! Here are some ideas for what you can do with the extra money:

  • pay down debt (especially high-interest debt, like credit card debt)
  • boost your emergency fund
  • increase your monthly savings amount
  • invest some of the surplus to pay for future expenses like your children’s education or your retirement.

If you have a deficit, you need to make changes to balance your budget and get back to the plus side. You can:

  • take a look at your discretionary spending and cut back
  • reduce expenses by negotiating better plans for your communications, banking and other services—contact your service providers to see if you can get better rates
  • increase your income, possibly by getting a different job or an additional job.

Another method for managing your cash flow and your spending is the envelope system. The advantage of the envelope system is that the money is allocated in advance, so there are pre-set limits to how much you can spend in any one category each month.

How to set up an envelope system

Rashida puts money into envelopes labeled with expense categories.
  1. Look at the total income you have available each month.
  2. Withdraw your fixed monthly expenses: savings, debt payments, rent or mortgage, insurance, utilities, etc. Set this money aside before you allocate funds to the envelopes.
  3. With the remaining funds, estimate how much you will need for major expenses like food, transportation, household, clothing, etc. for the month. (It will be helpful if you have tracked your spending for the last few months.)
  4. Label an envelope for each spending category. (An alternative is to use glass jars.)
  5. Divide the monthly total for each category by four and place that amount in the envelope at the beginning of each week.
  6. Although the amounts in each category may be rough estimates at first, you can adjust them as you get more experience. You can also add envelopes for special projects and additional categories, as needed.
  7. During the week, record the actual expenses on the envelopes to gather data for future use. At the end of the week, review the amounts you actually spent in each category. Each month, adjust the allocations as needed.
  8. Of course, the challenge is to stick to the amounts in the envelopes! Remember that spending more in a certain category is not an excuse to increase the allocation for that category. The point is to stay within the limit and to adjust the amount only if necessary.
  9. If you find that you have money left over in one envelope, consider adding it to your monthly savings. You may add to the funds in another envelope, but don’t spend more than the money you have available.

For example, suppose that Rashida has a monthly take-home pay of $2,100. After transferring $200 for debt repayment, $200 for savings, $700 for rent and $350 for monthly bills (including a transit pass, telecommunications and utilities), she calculates that she will need the following amounts for her monthly variable expenses:

  • groceries and eating out: $300
  • clothing: $75
  • entertainment: $125
  • household (cleaning supplies, housewares, etc.): $50
  • miscellaneous (for unplanned expenses): $100

Dividing each amount by four, she sets up envelopes with her weekly amounts:

  • groceries and eating out: $75
  • clothing: $18
  • entertainment: $30
  • household: $12
  • miscellaneous: $25

Now she will have to see if these amounts are realistic. If she needs to spend more on clothing, for example, she may have to take some money out of the entertainment envelope. If she needs to buy a household appliance, she may have to cut back on eating out.