Mastering Cash Flow

A budget is often viewed with a negative connotation: restricting, confusing, or time-consuming. However, a well-thought-out budget often has the opposite effect: it is liberating and educational.

As Dave Ramsey says, “A budget is telling your money where to go instead of wondering where it went.”

Fixed Expenses vs. Flex Expenses

When we look at cash flow, we separate it into two buckets:

1. Fixed Expenses: Mortgage/rent, utilities, insurance, groceries.

2. Flex Expenses: Vacations, dining out, hobbies, shopping.

This distinction is important because Flex Expenses are the easiest to influence. Small tweaks to your Flex spending can compound over years to massively increase your savings rate.

Tools for Budgeting

The traditional pen-and-paper or spreadsheet method works for many. However, for those who prefer automation, we recommend using modern tools.

Since Mint is no longer in operation, many Canadians have switched to Monarch Money.

• How it works: Connects to your Canadian banking institutions to track and categorize expenditures.
• Features: Sets monthly targets for categories (e.g., dining out) and tracks progress in real-time.

Note: We have no affiliation with Monarch; it is simply a tool we find effective.

The best way to budget is to use the method you are most comfortable with and are likely to repeat. A conscious re-think of your Fixed and Flex expenses can provide the financial peace of mind that allows you to enjoy your wealth without worry.