How Can You Avoid Bankruptcy?

Your Budget, Methods and Budget Counselling

Why a budget is necessary

A budget is a tool that allows you to take control of your personal finances and to make the best use of your income in order to meet your needs, according to your values and preferences. It also helps you to plan and to ensure that you reach your objectives and aspirations. When we realize where our money is going, some options may become more apparent.

Insofar as we have basic needs to fulfill a roof over our head, heat, a car for getting to work, clothing, childcare and school costs for children, food, etc. and other needs such as recreation, travel and that tenth pair of shoes… you must understand your financial situation in order to distinguish between what is essential and what is unnecessary. This will allow you to see your spending priorities.

You have to understand the reason for your debts and obligations (required payments, due date of bills, etc.) before choosing a course of action that could help you reduce your debt.

In short, preparing a budget will allow you to:

  • understand your true financial position;
  • determine how much money you need to meet your basic needs;
  • achieve your goal of regaining control of your spending;
  • evaluate your daily expenses;
  • identify the priorities that will be the base of your consumer choices; and
  • perhaps even save for more difficult times or help make a cherished dream become reality.

Useful budgeting tools

Preparing a budget means identifying as accurately as possible your income and expenses for the next twelve months. This can been done by referring to expenses from the previous year or a tally of your monthly expenses for a set period, or by using a budgeting worksheet. You can download an example of a worksheet below:


If the following document is not accessible to you, please contact Canada’s Office of Consumer Affairs (OCA) to obtain other appropriate formats.


This worksheet may be a good tool to use in preparation for a meeting with a budget counsellor. Since this worksheet includes only the basic required budget categories, your counsellor may ask you for additional details on your expenditures and revenues.

  • Budgeting Worksheet: PDF version (PDF format, 78 KB, 3 pages)
  • Budgeting Worksheet: RTF version (RTF format, 2.7 MB, 3 pages)

To access the Portable Document Format (PDF) version you must have a PDF reader installed. If you do not already have such a reader, there are numerous PDF readers available for free download or for purchase on the Internet:

To view the RTF version, use the document conversion features available in most word processing software, or use a file viewer capable of reading RTF.


Various budgeting tools are also available some of which require a computer.

Preparing a budget is time consuming and requires you to be realistic. If you have a partner, take the time to prepare your budget together. It requires discipline to budget over a period of time in order to record all expenses incurred, no matter how small the amount.