Live Well: How to Build Your Budget

A budget can be a powerful tool. It can help you understand where your money goes, find ways to save more, and achieve your financial goals.

A budget can be as simple or complex as you want.

Here’s how to get started.

1. Track your expenses. First, understand how you are currently spending your money. Look at recent bills, bank statements, and credit card statements to get the details.
2. Put your spending into categories. Examples include housing, food, transportation, utilities, entertainment, etc.
3. Add up your income. Next, add up your household’s monthly take-home pay. (That means the money that actually gets to your bank account after taxes, insurance, and other deductions.)
4. Calculate the difference. Subtract your monthly expenses from your monthly income.
   • If there is money left over, put as much as you can toward your first and most important financial goal (such as setting up an emergency fund).
   • If you are falling short, find places to cut back on spending.

Online tools can help

There are plenty of online resources that can make it easier to manage your budget. Make sure you go to a reliable source. For example, the Financial Consumer Agency of Canada has an online Budget Planner tool that’s free to use. You can also find budgeting resources and suggestions at Get Smarter About Money.