Updated April 14, 2022
A budget helps you see the big picture and get a better handle on your expenses and income throughout the year. It also allows you to find savings opportunities and plan your goals. Here are some simple tips that will help.
1. Determine your income
Establish your monthly net income, especially if it varies. If you’re self-employed, for example, average your income over a few months or even an annual budget. You can then allocate this income to different expense categories.
2. Categorize your expenses
Make a list of all your expenses, whether you pay by credit card, through your chequing account or with cash. If you have no idea of how much you spend, track each purchase, and do this for a few months. Your budget - This link will open in a new window. will give you a better idea of your basic expenses, extras and how much you need to set aside for your goals.
Once you’ve listed everything, organize your expenses into 3 main categories. Here’s an overview of what an ideal budget looks like.
50% for basic expenses like:
- Rent or mortgage payment and taxes
- Phone and Internet
- Transportation: car (loan, lease, registration, gas), public transit
20% for financial goals like:
- Emergency fund
- Savings account for specific goals, like buying a home, taking a trip, kids’ education or retirement plans
- Debt repayment (credit cards, loans, lines of credit)
30% for extras like:
- Meals (takeout and delivery)
- Fitness memberships (gym, yoga classes)
- Esthetics (hairdresser, esthetician, manicures)
- Subscriptions (movies, videos, music, apps)
- Outings and leisure activities
If you have to tighten your budget, you can cut some of these expenses.
2 tips to help you keep an eye on your budget
Set up hassle-free automatic payments
Some expenses are recurring, whether daily or weekly, while others only come up once a year, like property taxes and insurance. Here are some tips to help you keep a closer eye on your budget:
- Choose equal monthly payments (heating, phone plan and so on) whenever possible
- Set up automated payments for things like hydro, Internet and TV
- Homeowners: Include your property taxes with your mortgage payments
- Review your fixed expenses and see if there are any you no longer need
Be honest: don’t underestimate your variable expenses
To maintain a balanced budget, stay objective and honest about your spending and earning.
- Use the right numbers (the real numbers, not the best-case-scenario ones)
- Keep your receipts and track them regularly
- Set up alerts to notify you when you’ve reached your monthly limit
3. Set it and forget it
By adopting a few simple habits, saving becomes an integral part of your budget.
- Set up an emergency fund - This link will open in a new window.. Savings is often the most overlooked and maybe the most important aspect. If something unexpected happens, you can use your savings to cover essential expenses without having to jeopardize your goals or rely on credit if you lose income.
- Establish savings goals and set up automatic transfers - This link will open in a new window. to your savings account. Start small if you need to.
With a nice cup of coffee or glass of wine in hand and maybe some relaxing music on, budgeting doesn’t have to be a huge chore. If you need guidance, we’re here to help you get some perspective. Feel free to reach out to your caisse - This link will open in a new window..
Having a hard time financially? Take this test - This link will open in a new window. to assess your financial situation.
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