How to Create a Budget You'll Stick To

Written by Anita Saulite

Thursday, February 4th, 2021

Do you know where your money goes each month? A survey on financial capability by the Government of Canada in 2019 revealed only half of Canadians have a budget.

Reasons Canadians gave for not having a budget? Some didn't have enough time or found it boring (9%), while others felt overwhelmed about managing money (6%).

Research from Credit Canada reveals that people who stick to a budget achieve enhanced financial outcomes and reduced financial stress.

Here's how to feel empowered about setting and keeping a budget.

What Is a Budget?

A budget is a personal or household roadmap that compares and tracks your income or revenue (how much money you earn against your expenses), usually for one month. You still have the freedom to spend money, as long as you budget your spending so you don't get into debt or live beyond your means.

If you're ready and serious about creating a budget and getting your finances on track, simply follow these easy steps.

1. Choose Your Budget Tool

There are many different budgeting tools available today. Research what's right for you: from digital budgeting apps, to Google sheets and Excel spreadsheets, to a simple pen and paper. It really comes down to what works best for you. You may also want to test or try one or two tools before you settle on the right one.

2. Organize and Input Your Financial Data

Once you've selected and tested your budgeting tool, identify all your sources of income or revenue such as:

  • Employment
  • Side hustle
  • Government assistance
  • Investment income

Do the same with all your expenses. These can include:

  • Rent or mortgage payments
  • Property taxes
  • Utilities
  • Groceries
  • Savings, credit card balances
  • Other monthly, quarterly and annual expenditures

You may need to adjust the categories based on your situation or whether you're doing a personal or household budget. Once you've compiled your two lists – revenue and expenses – input your data.

3. Check in on Your Budget Monthly

In this step, you'll need to gather your credit card, bank account and other statements. Set up a ledger on your computer, tablet or phone and input your budgeted categories. In a separate column enter what you actually spent in each category. Then subtract what you actually spent from what was budgeted. Here are some examples:

Budget expense versus actual spend example:

Category Budget Actual +/-
Take out food $200 $150 +$50
Transportation/gas $250 $300 -$50


Monthly revenue and expense surplus example:

Income (all sources): $4,000

Expense (all sources): $3,823

Surplus: $177

Monthly revenue and expense shortfall example:

Income (all sources): $4,000

Expense (all sources): $4,150

Shortfall: -$150

If after you reconcile, you find yourself with a shortfall, next month you can cut back on expenses to make it up. Maybe there's a subscription you don't need anymore?

How to Stick to Your Budget Once You Start

Remember your budget is dynamic and ever changing. Your goal should be to stay ahead of whatever comes your way, since it's easier to make adjustments if you anticipate changes.

Also, give your budget a chance to work, because it's a financial tool that will help you to stay on top of your finances and it's easier to keep going once you've found your rhythm.

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