Of course, this method only works if you know for certain you’ll have enough to cover your essentials. So long as there’s money in the bank, you don’t have to worry about overspending. With this method, you know your needs are covered. Whatever is left becomes money for other expenses, such as groceries, subscriptions, and dining out. When the paycheque hits the bank, money is automatically taken out to pay for housing, utilities, debt repayments, insurance, or even dropped into your savings account. Instead of budgeting out expenses, you might want to set up automatic withdrawals. Once you see how much you’re really spending, you can start slashing excessive spending and putting more toward your goals. If you feel like you’re living paycheque to paycheque, if you’re unaware of how much you’re spending, use a budget to get back on track. Then, at the end of the month, they wonder where all their money went. Many Canadians suffer from what we can call “spending amnesia.” That is, they spend money. That said, if you’re constantly feeling cash-strapped at the end of the month, it might be time to get on the budget. In fact, if you’re in control of your spending, you’re already doing what a budget does best, which is to help you spend less than you make. You’re naturally thriftyĬanadians who can manage to live below their means don’t necessarily need to list their expenses line by line. Whatever is left, you use on your living expenses.
For instance, if you want to save $500 a month, you start by deducting $500 from your monthly income. That is, before you budget your expenses, you list your savings goal first. The best budgets have savings goals built into them. On the contrary, if you find yourself always aiming at the same financial goals - building an emergency, saving for a downpayment, saving for retirement - but never getting anywhere, it might be time to design a budget that helps you make progress. As long as you’re saving consistently, it doesn’t really matter what you do with the rest of your money. If that sounds like you, don’t worry about budgeting. They put this money into a savings account, a TFSA, or an RRSP, and they don’t touch it - not until they need it.
They pay themselves first, meaning they set money aside the moment they get paid.
If you’re already saving money, then a budget probably won’t help you. In fact, I’ll go ahead and say it: if one of the following fits you, you can ditch the monthly budget. List your expenses and match them with your income, so the commandment goes, or else you risk overspending.īut, thankfully, personal finances aren’t one size fits all.
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