A Better Way to Stay On Track with Your Money

Posted on: April 7, 2021

By Noel D’Souza, P.Eng, CFP®

Do you feel like your money is just trickling out of a hole in your pocket, and you are not really sure where it’s all going or why there is nothing left at the end of each month? You’re in the right place!

If there is anything that we have taken to heart over the past year it is that our world can be turned upside down when we least expect it and in ways we could not have imagined.

We need to be financially prepared, and mindful spending and intentional saving are paramount. 

So, how do you become mindful of your spending and intentional about saving? Meticulously measured budgets and long tallies of receipts are not the answer for everyone. If you have the patience and discipline to do that, you probably already know where every penny is going, so you don’t need a system to get your cash flow on track.

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But for those who do need help, my colleague and co-founder of Money Coaches Canada, Sheila Walkington, introduced a system that is considered by some as financial heresy – forget keeping track of what you’ve already spent and look to the future.

The Envelope System, Refined 

Before you take this as a carte blanche blessing to run up that credit card and dive into the overdraft, Sheila and my Money Coaches Canada colleagues place some strict parameters on the process. It goes back to the old days of putting money into envelopes to make sure everything – from groceries to the gas bill – got paid. When payday rolled around, you’d put cash for food in one envelope, money for the phone bill in another, savings towards new clothes for school in yet another, and so on.

Consider the case of one of Sheila’s clients, who confessed to almost canceling her post-Christmas appointment because she didn’t want to admit just how high her Visa bill had climbed, “I had no trouble putting together a budget based on what I had spent,” she said. “I was spending more than I was bringing in, and when annual expenses rolled around, it was a scramble to find enough money to pay them.”

For a detailed and very timely example, take a look at Sheila’s household budget and how she adapted her spending during the pandemic: Cash Flow in the Time of COVID-19.

Prioritized Spending 

Sheila’s formula, and the one I’ve been using with clients successfully over the past few years, is a spending and savings plan that makes you put your money where your priorities are. And it uses no-fee high interest accounts offered by banks to recreate these “electronic” envelopes – so the car insurance money gets saved and not spent on pedicures, the account for university fees adds up instead of being drained by car repairs or other unexpected expenses. And the vacation budget, often a priority but usually the first to be sacrificed to overspending in other areas, gets left alone, safe from impulse shoe buying or unlimited lattes.

In effect, it doesn’t just give you a budget to follow. It forces you to limit your spending in each category to the amount you have in the account. If you’ve determined that it costs you $800 a month for groceries, and by the third week, you’re down to your last $60, no seeking solace in the credit card or pilfering other accounts. Get out the recipes and use up what’s left in the cupboard.

For the client who was stuck in overdraft, it took some discussion and hard decisions to set priorities. She opted for several accounts because if there was money in a single account that had to cover several long-term items, there was a temptation to borrow from it with the expectation that money would magically appear to fill the account by a bill’s due date. Other clients chose to manage with fewer savings accounts, but the key is to create clarity. Do I have money for clothes or not? Have we spent the dining out money, or is there still some left for Friday night?

The Payoff is Huge 

I have seen it first hand with many of my clients throughout Canada. And not just in terms of money but in peace of mind. “The first time my annual insurance bill came around, and I actually had enough money in a savings account to pay it, I realized it was working” and “It’s so liberating to plan a vacation and pay for it instead of putting it off or putting it onto my credit card” are just some of the comments I often hear from clients. The system works. And the spending guilt is gone.

Although the process may sound like a simple one and you can do it yourself, you may run into questions unique to your situation where an expert’s advice and guidance will bring great value. A Money Coach is experienced with setting up, customizing, and refining a cash-flow system specific to any client’s current and evolving circumstances and needs. 

Be sure to review our Money Coaching service, and it might be the best step for you.

Read about how we’ve helped people just like you feel empowered and ready for the future. 


This article was first published in June 2016 by Julie Langevin. It has since been updated by Noel D’Souza and republished. 

Category(s): Budgeting and Cash Flow, Relationship to money
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