Canada may be a high-income nation, but 1 in every 7 Canadians lives in poverty, according to advocacy groups. In 2011, close to 13 percent of the population was living off low wages. The number has not significantly improved still. As Canada’s once dominant natural resources industry falters, many are left jobless and without a steady source of income.

For low-income Canadians struggling to find a job that pays well, personal finances can be a nightmare at times. It’s easy to become prey to payday lenders and financial scams when one is poor. Most low-income families end up in vicious cycles of borrowing, spending and borrowing even more. There’s only one way to break this cycle and ease financial woes related to low wages: budgeting.

Budgeting is for everyone, rich or poor. For the poor saddled with debt, budgeting is a necessity to survive. If you spend more than you earn, it’s a glaring indicator that you will end up deep in debt, which is not a good situation to be in especially if your income is already low. Therefore, here are the budgeting essentials Canadians with low income should follow:

Set Goals

If you set goals before you start budgeting, it will help you stay focused throughout your endeavour. For example, perhaps by budgeting you want to become debt free, or you might want to budget to save money for a degree. Envision where you want to be in the future, and how your budget will help. Use that to motivate yourself.

Budget Together

If you are married, it’s important to budget together, even if only one person is earning an income. Couples who live together and have families together should manage finances together as well if the budget is to work. After all, if the debt is not paid off, it will affect both parties, not just the one making money.

Track Expenses

Step one of budgeting is to track expenses. This requires some patience and time. To start budgeting, make a chart to note down all income and expenses. The expenditures should be categorised as “groceries,” “medicine,” “utility bills,” “transport,” and so on. Spend at least a month religiously noting down all expenses and the money you earn. Do not leave a single expense out.

Once you have your expenditures chart, you will be able to see exactly where your income is going. If you type in the data to a program like Excel, you can even make an actual chart to see which aspect of your life is the most expensive. You can start budgeting after you know your finances.

Make a Plan

Your income should exceed your expenses. This should be the main aim of budgeting. Make note of the expenses in your chart and divide the essential expenses from the ones that are not. For example, paying off the mortgage, electricity bills, food and medicine are essential expenses. Buying new clothes or eating out on the weekend are not. After you make the categorisation, you will have to make cutbacks from your inessential expenses section and add to the expenses section. For example, if you spend $100 each month eating out, you will have to completely eliminate that expense, and use the money towards something essential, like paying off the mortgage. It will be difficult at first, but making the necessary cutbacks is crucial to getting your budget in shape.

Manage Debt Wisely

Once you have more money to funnel into reducing debt, use it wisely. Pay off high-interest incurring loans first. Save some money each month so you don’t have to borrow all the time. Learn to get all your impulsive buying habits under control if you want to be debt free one day.

The most important aspect of managing the budget is to stay committed. It will be rough at first to not indulge yourself once in a while. When that happens, imagine all the good things that will happen because of your budget, and don’t stray off the path.