Patrick Traverse
Founder of MoneyCoach, retired pro hockey player and CERTIFIED FINANCIAL PLANNER™

Budget Made Simple!

For most people, talking about personal finance is like hearing the annoying sound of someone scratching a blackboard. People almost cringe at the thought of putting together a budget. However, it’s a painful discussion we all must face in life at some point in time.

It’s a known fact that we love the immediate joy and gratification that shopping gives us. We enjoy smelling the scents of a brand new car. We like to keep up with the Joneses! But what if the Joneses are on the path to bankruptcy, will you want to keep up with them then?

How a Personal Finance Budget Plan Benefits You

As you might have heard recently, we all need to “Pay Ourselves First”. It’s been common advice from TV experts how we should first put away a piece of our income for investments. Here’s what I recommend. Put aside a minimum of 20% from your net income for your financial plan. This money should be used to:

How to Start a Budget Plan

Budgeting your personal finance is the most important part of reaching your financial goals. It’s important to budget to save enough for retirement so we can live comfortable.  However, it also sets us up for a retirement where we can maintain a healthy lifestyle for the rest of our lives. So how can we set our budget and our spending habits as simply as possible? It’s simple!

Budgeting doesn’t need to be a grueling time-consuming effort. I actually believe that a simpler system is best. It shouldn’t be a chore that you will dread doing. Instead, it’s more of a monthly exercise to assess our saving progress. Here’s the first task you can to get started…

Divide your budget into 3 sections: Financial Plan Contributions, Committed Expenses and Lifestyle Expenses


No more than 60% should be spent on Committed Expenses. Your goal is to diminish this percentage as you get older. It’s best to treat it like a board game and strategize your moves!

Committed Expenses are anything that occurs on a regular basis that is a necessary part of our life. Utility bills, mortgage payment, rent, car payment, gasoline for that car, car maintenance …

One of the main reason people get in trouble financially is because they are not flexible in their budget. They commonly get stuck in payments they can’t afford. The key is to try to lower the percentage of income you dedicate to these expenses. If you lose the ability to produce income, you’ll be able to quickly modify your spending habits without occurring large losses.

Let’s move on to the last column - Lifestyle Expenses. The final 20%+ of your budget is an amount you actually want to increase during your lifetime. This is what makes your life more enjoyable and fun… Dining out, traveling, shopping, enjoying fun activities or saving for a boat. However, it is also the piece of your personal finance budget that can get out of control!

Working on a systematic budget to continue reducing the amount of money you spend on mundane daily expensive and while building more cash flow for your desired lifestyle expenses, is the key to financial success and a fulfilled life. (Read more about frugality)