* Cambrian will be closed on Friday September 30 for the National Day for Truth and Reconciliation

Creating a Budget That Works for You

Image - 900x420

There are many misconceptions about budgeting. This is because budgets have been vilified and are often associated with restricted spending. However, the opposite is true.

Budgets give you the freedom to spend your money without worry or stress by showing you a clear picture of your financial situation so that you can make the best possible decision for your hard-earned money.

What is a budget?

A budget is a game plan for tracking your income and expenses for a specified period - usually a month or a year.  When you budget, you create a plan for your money that will align with your priorities and financial goals.

Why do you need a budget?

A budget gives you insight into the state of your financial health. Most people are unaware of their overall financial situation. However, when it comes to your money, ignorance is not bliss. Having a budget guides your spending and enables you to make the most of every dollar.

While we are not all born with great budgeting skills, this discipline can be learned. Here are 5 simple steps to get you started with budgeting.

How to make a budget

1. Figure out your goal

Setting a goal for your budget increases your chances of sticking to it. For example, if your goal is to pay off debt within a certain period of time, chances are, defining that goal will serve as motivation for you to keep working towards it. Break down your goals into smaller pieces, that way you can focus not only on the goal but also on what you can do each day to help you achieve it.

2. Take note of your monthly income

Now that your goals are set, the next step is to know your monthly income. Your income can include your salary and anything extra that may come in such as money from a freelance job, monetary gifts, or even profit from selling your unused items on an online marketplace

3. Calculate your monthly expenses

The next step is to determine all your monthly expenses. A great way to go about this is to obtain your bank statements and go through them line by line. Expenses can either be:

    1. Fixed: These are expenses that remain constant each month. Some examples of fixed expenses are rent/mortgage, property taxes, car insurance, and gym memberships.
    2. Variable: These are expenses that vary each month based on the choices you make. Some examples include dining out, groceries, personal care, and entertainment.

While examining your expenses, be sure to cut down on any unnecessary spending. This is a great way to free up more income that can be used towards the goals you set in step 1.

4. Align your spending to your goals

Now it’s time for a side-by-side comparison of your income and expenses. While the reality of your finances can be jarring, knowing your numbers is a crucial step if you’re looking to turn your finances around.

Ideally, you would want your income to be more than your expenses. Anything left over after all your expenses are paid is your disposable income. This extra income can be directed towards your goals.

On the other hand, if your income is less than your expenses, the quickest way you can free up some income is to cut down some of your variable expenses. However, this is not the most sustainable way. You may want to consider increasing your income (for example: starting a side business, changing careers, or getting a promotion) and decreasing some of your fixed expenses (for example: reconsidering your gym membership or even moving into a more affordable apartment).

This step gives you a big-picture view of your financial health. When you have a clear picture of your finances, you can take the necessary steps to prioritize your financial wellbeing.

5. Review and modify as needed

Now that you are armed with a budget that aligns with your goals and are well on your way to financial prudence, do not forget to review your budget as you go.

Check in with your budget regularly to ensure that it still aligns with the goals you have set for yourself, and remember that you can always adjust it as needed.


Like building any new habit, be mindful of the fact that building sustainable financial habits can take time. If you go over your budget, don’t beat yourself up and give up. Pick up right where you left off and forge ahead. Setting a meeting with a financial advisor can also be a great way to keep you on track.