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What is it about Labour Day that makes me feel like I still need to buy fresh pencils and a note pad? I’ve been out of school for five years, and yet September is still a time for a fresh start for me. There’s a sense of anticipation. A time for change. Time to detox after the summer patios. Time to implement new business plans. And most of all, a great time to get finances back in order. Labour Day weekend represents the end of something sweet and the beginning of something exciting. What could be more exciting than a budget?

Making a budget can be exciting, honest!

Why? Because staying on a budget will actually lead you toward whatever your savings goals are. If you can stick to it, you’ll get to go on that trip, start that business, pay the debt, or buy that house.

Without a realistic budget, none of your goals get a chance to materialize. It doesn’t matter how many great business ideas you have or how much you want to pay down that student loan, if you don’t have enough cash flow at the end of the day to make it happen, your plan is shot.

That’s why a proper budget is the most important part of any financial plan. It’s all about the cash flow. So, for any of you out there who are looking to get your finances in order this September, here’s an uncomplicated budget to get you on track.

A budget should be easy to do. Latte-counting budgets are overly complex. There are too many rules that set us up for failure. Intricate Excel sheets begone! Away with glass jars of grocery, gas, and clothes allowances! Bring on the simplicity!

So, where to begin and what is important?

Step 1: Get your fixed monthly costs under control


Fixed costs are those annoying expenses that you owe each month whether you like it or not. Things like your housing costs, insurance premiums, transportation costs, groceries, minimum debt payments, etc. Essentially, these are any expenses that you’d still have to cover if you lost your job tomorrow or had no sales in your business.

This number is extremely important to monitor. If your fixed costs are too high, all your available cash flow is sucked up before you even get to say yay or nay. It’s already spent the minute it hits your bank account. When fixed costs are too high, you are financially strapped because there is nothing left over.

The most important rule: Your fixed monthly costs should never rise about 50% of your after-tax cash flow.1

Here’s the liberating thing – it doesn’t matter if your housing costs are 35% or 45% of your income or if your gym membership is ridiculously expensive or ridiculously cheap. There are no restrictions on how you make up these fixed costs, as long as they are at 50%, you’re good. You get to choose how you want to make that happen.

When your fixed costs are at 50%, you know exactly how much money is left over each month that you can spend and save! It’s a beautiful thing.

Step 2: Save like it’s a bill


Many times, people save what’s left over in their account at the end of the month. This is a big no-no for a proper budget. Save like a bill. I repeat. Save like a bill. Find out what amount you want to save every month. If your fixed costs are at 50%, you should aim to save anywhere between 10% and 20% of your after-tax income.

Move that money from your everyday bank account into a separate savings account. Then, saving is NOT an option, and you can’t spend it because you don’t have access to it. If you save before you spend, you’ll get to where you want to go and the payoff will be so sweet!

A tip about savings: We should all try to save at least three months worth of living expenses as a “slush fund” account.

Life happens. Cars break down. Family visits from out of town. People get married in expensive all-inclusive resorts. When unexpected expenses arise, you need to bust a move to come up with money. Without a slush fund, these expenses usually happen on lines of credit, credit cards and loans.

Living without credit in this day and age is a ridiculous notion. However, a good slush fund can help take the desperation out of those moments and keep as much as possible off the “to be paid back” list.

Debt has monthly minimum payments. Minimum payments become new fixed costs and steal your cash flow – not fun.

Step 3: Spend your money!


Lastly, a very important part of anyone’s budget is spending money. It’s the part of a budget that many don’t plan for or feel guilty about. Spending money gets no love, but that’s such a shame! We all work hard to earn our living and we should be able to spend a portion of our money on whatever we’d like – guilt free!

Once you find out exactly what’s left over after all fixed costs and savings, you know just how much you have for spending money. You can spend all of this money to zero and not feel guilty about it. It’s YOUR money. It’s meant to be spent! And, it shouldn’t matter how you spend it, just as long as your choices are within the limits of your budget – so stop counting lattes. As long as you spend within your budget, spend how you wish!

It’s important to have spending money. Trying to live without enough spending money is like trying to live on an all-lettuce diet. You can only sustain it for so long. Eventually, you’re going to see a pizza, and you’re going to binge. This usually happens on credit.

So loosen the knot a little bit. Ideally, 30% of your after-tax income should go to you and you alone for fun!



The most important part of your financial plan should actually be to ensure that those monthly fixed costs are under control, and then the financial freedom is all yours!

Fixed costs under control = Extra monthly cash flow = Ability to save = Ability to spend without guilt!

Guilt-free money….isn’t that what it’s all about?


1 Elizabeth Warren, All Your Worth

Shannon Simmons
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Shannon Simmons is a financial advisor and founder of The Barter Babes Project. She offers professional financial advice to those who can’t usually access it by providing her financial services in exchange for a bartered good or service instead of a fee.

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