Are you tired of feeling like your money disappears faster than your morning coffee?
You’re not alone, friend. Budgeting can feel overwhelming, restrictive, and let’s face it — kind of boring. But what if there was a simple, visual way to take charge of your money without tracking every single dollar?
Say hello to the Money Reservoir System! It’s flexible, easy to understand, and totally customizable for your life in Canada.
This post will show you how to divide your money into three “reservoirs” — Needs, Wants, and Savings/Goals — and how to make it work whether you’re a single parent in Thunder Bay or a couple in Vancouver trying to pay off debt.
1. What Is the Money Reservoir System?
1. What Is the Money Reservoir System?
Let’s break it down in plain language. Imagine your money is like water flowing out of a tap. Every payday, that tap turns on — and the water (aka your money) pours out. Now, instead of letting it spill everywhere, you direct it into three big jugs, or what we call “reservoirs.”
Each reservoir has a purpose:
-
Needs Reservoir:
This is for the basics — rent, groceries, bus pass, phone bill, kids’ clothes. Stuff you *have* to pay for just to get by. -
Wants Reservoir:
This one’s for fun — eating out, streaming services, hobbies, that fancy latte that makes your day feel a little brighter. -
Savings/Goals Reservoir:
This is your future fund — building an emergency cushion, paying off debt, saving for a trip, or contributing to your RRSP or TFSA.
You’re in charge of how much money you pour into each reservoir. It’s like saying, “This month, I want to make sure I cover my bills, treat myself a little, and still save something for later.”
✔️ It’s practical and easy to visualize
✔️ It helps you avoid overspending in one area
✔️ It works even if your income changes month to month
And here’s the best part — you don’t need a spreadsheet, calculator, or accounting degree to make this work. Just picture those three jugs, figure out your numbers, and get pouring. You’ll instantly have a clear, big-picture view of where your money’s going — and that’s a major win. 💧💵
2. Why Traditional Budgets Often Don’t Work
Traditional budgets often try to track every dollar, which sounds great in theory, but let’s be real — most of us can’t keep up with that.
✔️ They’re too detailed and overwhelming
✔️ Life changes — and your budget needs to flex with it
✔️ The reservoir system focuses on big-picture priorities, not nickel-and-diming your life
It’s budgeting made human — and Canadian.
3. The Three Main Reservoirs
Alright, now that you’ve got the idea of your money flowing into big jugs, let’s take a closer look at what each reservoir actually *means*. This part is key — because when you know *where* your money is going, it’s way easier to make better choices and avoid that end-of-the-month panic.
Everything you spend money on falls into one of these three buckets (or jugs, if we’re sticking with the water metaphor):
-
✔️ Needs Reservoir
This is your survival jug. Think of it as the money that keeps the lights on and food on the table. If you didn’t pay for these things, life would get rough pretty fast.
- Rent or mortgage
- Groceries and essential food items
- Utilities (heat, hydro, water, phone)
- Transportation (bus pass, gas, car insurance)
- Basic clothing (think socks, not shopping sprees)
-
✔️ Wants Reservoir
This is your joy jug. These aren’t things you *need* to survive, but they make life feel good and help you enjoy the moment. And yes — you *should* have some money in this jug, guilt-free!
- Take-out or coffee runs
- Netflix, Spotify, or other subscriptions
- Going to the movies or out with friends
- Hobbies, crafts, or little treats
-
✔️ Savings/Goals Reservoir
This is your future jug. It’s all about setting aside money to help you breathe easier down the road — whether that’s for emergencies, paying off debt, or something fun like a trip to Banff or a new laptop.
- Emergency fund (for surprise car repairs or job loss)
- RRSP or TFSA contributions (investing for retirement or other goals)
- Paying down credit card or student debt
- Saving for vacation, a home, or a new car
Here’s the golden rule: Be intentional — not perfect. Some months your Wants jug might overflow a little. Other times, you’ll pour more into your Savings jug. The point isn’t to be rigid; it’s to pay attention and aim your money where it matters most to *you*.
4. How to Use the Reservoir System
Here’s how to get started:
✔️ Step 1: Calculate your monthly income (after tax)
✔️ Step 2: Decide how you want to divide your income between the three reservoirs
✔️ Step 3: Adjust the percentages based on your reality and your goals
✔️ Step 4: Use different accounts or budget tools to track where your money flows
Pro tip: Most Canadian banks now offer free budgeting tools in their apps.
5. Suggested Starting Percentages (But These Are Just a Guide!)
The popular 50/30/20 rule works like this:
-
50% to Needs
-
30% to Wants
-
20% to Savings/Goals
But hey, you’re not a robot. Adjust the split to fit your life:
-
Living paycheque to paycheque? Your Needs might be 60–70%
-
Paying off a credit card fast? Pump your Savings/Goals up to 30–40%
-
Got a bonus this month? Throw it all into the Goals reservoir!
6. Real-Life Example: Emma and John in Guelph
Emma and John had been struggling with credit card debt. They used the reservoir system and adjusted their percentages like this:
✔️ 55% to Needs
✔️ 20% to Wants
✔️ 25% to Savings/Goals (focused on debt repayment)
They cancelled cable, meal-planned more, and used automatic transfers. Within 6 months, they had $2,000 less in debt and a growing emergency fund. 💪
7. Tips for Making the Reservoir System Work for You
✔️ Start small. Even saving $10 counts.
✔️ Use separate accounts or categories in your app to keep things tidy
✔️ Automate what you can — savings, bill payments, etc.
✔️ Check in every few months and adjust your percentages as needed
8. Visual Guide to the Money Reservoir System
You can also find this graphic and more at manageyourmoney.ca.
9. Final Thoughts: You’re in Control
Budgeting doesn’t have to be restrictive — it can be freeing. The Money Reservoir System puts you in the driver’s seat.
✔️ It’s flexible
✔️ It’s visual
✔️ It’s uniquely yours
So go ahead — take five minutes today to map out your own reservoir system. You’ve got this. 💧💸
Want more tools, trackers, and free guides? Head over to our resource centre or check out this Government of Canada budgeting tool.
Let’s fill those reservoirs one smart step at a time! 🇨🇦💰
The Money Reservoir, a system for managing irregular income. A Smarter Way to Manage Your Finances and Harness the Power of Reservoirs to Break the Paycheque-to-Paycheque Cycle and Build Financial Stability. For more information please visit The Money Reservoir on Amazon
Disclaimer for ManageYourMoney.ca
The information provided on ManageYourMoney.ca is intended for educational and informational purposes only. It should not be taken as financial advice. The opinions shared are those of the authors and are meant to encourage sensible financial habits and decision-making. We recommend that you do your own research or consult a certified financial advisor before making any financial or investment decisions. All investments come with risks, and there is no guarantee of success. Past performance is not a reliable indicator of future results. Always consider your personal financial situation and risk tolerance before pursuing any investment opportunities.
As always, I am not a qualified financial advisor. I just relate financial management to my own experience which may not resemble yours at all. Advice is frequently worth exactly what you paid for it. Most of mine came from expensive experiences.
Please share your thoughts in the comment section below.
