Creating a budget is easy to do, right? Just pick an amount of money that you want to spend each month and then do it. But if it were so simple to do, there would be a lot more people who actually stick to their budget. Creating a solid, easy to uphold budget is harder, but luckily, attainable.

How to Create a Budget

Step 1 – calculate how much money you actually make

Down to the last penny, record how much after tax money you make.


Step 2 – Don’t include any extra money that you might make

Any Birthday money or work bonuses should not be included in your budget as they cannot be relied upon. Instead, all bonus money should go into your savings.


Step 3 – Record all of your fixed expenditures

These include rent/mortgage, car payments and insurance. For monthly bills that may fluctuate, like utilities and phone bills, record the highest amount that they could be


Step 4 – Think of all of the different categories of spending that you do.

These categories will vary person to person, but try to be as specific as possible. Separate food into sub groups such as groceries, work lunches, meals with friends and alcohol.


Step 5 – Decide how much you are currently spending in each of the categories

Look back at past bank statements and credit card bills to calculate the average amount that you spend each month. When in doubt, add a bit more to the actual amount.


Step 6 – See if what you spend is less than what you make

If it is not, or if the amount is too close, take a closer look at the categories and what you spend. This is why it’s important to think of multiple categories as it puts your spending into perspective.


Step 7 – Make an achievable plan to decrease spending

If you really enjoy eating at restaurants then it isn’t likely that you can stop altogether. Instead, try to stick to only eating out once a week. If someone in your household is a good cook, increase your grocery budget so you can buy the odd luxury ingredients and decrease the money in your restaurant category.


Step 8 – Think about your savings

I know a lot of people think about savings first, but if you’re living paycheque to paycheque, then it can become very hard to save. Be realistic about savings. There are three main categories to save for: retirement, long term and short term.

            Retirement: it is never too early to start saving for retirement

            Long term: saving up for a down payment or a large trip

            Short term: can be used for large item purchases or, if need be, a rainy day fund


Step 9 – Realize that a budget is a living organism

At the very least you should be revisiting your budget monthly, if not weekly. Anticipate large events like weddings and holidays and know that to afford that gift for someone you’ll need to use your clothing budget for the month. If you decide on what to use your short term savings for, but need to reach your target earlier, decide where to cut costs to make that happen.



Budgets take a lot of energy to maintain, but like money, if you invest your time wisely, you can be rewarded nicely. Take the time to do the math and create a budget, but remember to check in and keep your budget updated.

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