Money: The Basics

A budget helps you manage your money. Budgeting is about planning how much money you are going to earn, spend and save in a certain period of time. This can help make sure you have enough money for all your necessities and to meet the financial goals you set for yourself.

Before you start budgeting, you will need to know your expenses and current spending habits. The Government of Canada has a helpful budget planning tool. You can use it to set goals for how much you want to spend and save each month based on your income. One of the ways to budget is to follow the 50 – 30 – 20 rule. This means you should aim to spend:

• 50% Needs – these are expenses such as housing, food, transportation, etc.
  
• 30% Wants – this includes things like eating out, entertainment, travel, etc.
  
• 20% Savings – this can include adding to your savings account, investing, paying debt, etc.
  

These percentages are not a one-size-fits all. You may be spending more on your needs if you are living in an area that is more expensive, or perhaps you can save more if you are living at home and do not have expenses you need to pay. Use this as a starting point and adapt your budget to your own needs and situation.

• Check over your budget every three months to see if it needs to be updated. You should also double check your budget when there are significant changes such as starting a new job, buying a home or moving in with a partner.
• Keep your receipts and bank statements to track where you are spending your money.
• Make a budget that is realistic and balanced between expenses that don’t change, things you need, and things you want.
• Use budgeting apps and tools.