Budgeting and Saving

How to Budget Your Money: Budgeting Tips to Help You Save

By Debra Pangestu

Man Going Through His Budget When it comes to knowing how to budget your money, it’s all about creating a realistic spending plan with budgeting tips to help you save and manage money better.

Charles Dickens was right when he said “Annual income twenty pounds, annual expenditure nineteen pounds – result happiness. Annual income twenty pounds, annual expenditure twenty-one pounds – result misery.” Spending money can be fun, but if you end up spending more than you earn, it can be misery making.

The good news is that life doesn’t have to be this way. Like driving a car or playing a musical instrument, managing money is a learned skill, and it’s never too late to start! With the help of a budget calculator spreadsheet and some money management tips, you’ll be well on your way to learning how to budget your money and save.

Budgeting Tips to Help You Learn How to Budget Better

The foundation of sound money management is the budget, which is essentially a plan for your money based on the choices you make and the priorities you identify. Once complete, your budget is the foundation with which you can manage your current income and plan for future possibilities. And it all starts with taking these seven steps:

Step 1: Set Realistic Financial Goals

Having a goal for your money will help you make smart spending choices. So before you start creating a budget, take a moment to ask yourself what your financial goals are, and what you want your finances to look like in one year. Once you decide what’s important to you, you’re ready to start.

Step 2: Identify Your Income and Expenses - Track Your Spending

You likely know how much you earn each month, but do you also know where you spend your paycheque? The easiest way to find out is to track your spending. Spend as you normally would, and for a few weeks or even a month make a record of everything you spend with a spending tracker.

Step 3: Separate Your Needs and Wants - Determine Your Priorities

Each time you spend, ask yourself: Do I want this, or do I need it? Can I live without it, or is this necessary for my day-to-day-living? If you set clear priorities for yourself, the decision becomes easier to make.

Step 4: Design Your Budget - Write it Out or Use a Spreadsheet to Balance What You Earn with What You Spend

Make it a point to spend less than what you earn. Decide ahead of time what you’ll use each paycheque for, and try to balance your budget to accommodate all your needs and necessities. Using a paycheque planner can make learning how to live on a budget a breeze.

Step 5: Put Your Budget Into Action - Plan Your Spending Around Your Paycheques

Match your spending to your payday cycle. Determine ahead of time what you’ll use each paycheque for, making sure you allocate enough money for necessities like housing and food, as well as savings and paying debts. It’s also important to squirrel away some money for emergencies and “fun.” This will protect you from going into debt further, because you won’t turn to credit in order to pay for your living expenses.

Step 6: Plan for Irregular, Seasonal and Emergency Expenses

When we budget, we often forget to plan for expenses that come up only once a year, such as back-to-school, Christmas, birthdays and anniversaries. Remember to set aside money to pay for irregular, seasonal and emergency expenses, so that when the time comes, you’ll be able to afford them without going into debt.

Step 7: Look Ahead - Learn How to Live with a Budget & Ask for Help if You Need It

Getting into the swing of things can take a month or two, so go easy on yourself. You’ve lived all this time without a spending plan, so it can take time to adjust to this new lifestyle.

If things aren’t falling into place as quickly as you’d like, don’t get discouraged. We'd be happy to help you learn how to budget your money. Contact us by phone, email or anonymous online chat to ask us some questions or to make a free appointment to speak with one of our professional Credit Counsellors.

Budget Forecasting Can Help You Save Money

Once you’ve created your budget, map out your spending for six months to one year down the road. By doing some budget forecasting, you can see ahead of time which months your finances may be tight and which months may offer some leeway. You can then look for ways to even out the highs and lows in your finances to make your budget more manageable.

Extending your budget into the future can also help you forecast how much money you can save for important things like your vacation, home renovations, your retirement, or an emergency savings account.

Using your budget to forecast your spending can really help with your long term financial planning. You’ll be armed with enough information to make realistic assumptions about your annual income and plan for long term financial goals like buying a home, starting your own business, buying an investment or recreational property or retiring.

Beyond Budgeting: Learn How to Budget Better with a Non-Profit Credit Counselling Agency

Learning how to live on a budget is more than just creating a money plan. It’s about creating a plan of action that anticipates the best and prepares for the worst.

If you’re having some difficulty balancing your budget and living within your means, don’t be afraid to make a confidential appointment with one of our non-judgemental credit counsellors. It’s our job to teach you how to save money and how to budget and pay off debt, all for free.

You can also get more budget planning tips by attending a Money Management or Budgeting workshop, either in person or online.