Creating a Budget

Let’s talk about finances. 

Oh no, the dreaded conversation. Here’s the thing- it shouldn’t be dreaded! I knew someone once who took money out of the ATM and then threw away the statement that was printed out and said “I’m too scared to even look at my balance”. That should NEVER be the case. Ignoring your money problems do not make them go away. 

I’ve been watching a lot of Graham Stephen lately and I strongly believe that you should too. If you don’t know who he is you need to check him out immediately. Search Graham Stephan or the Graham Stephan show. He is awesome.

He has really made me want to get in tune with my finances, invest, and save. As much as it isn’t ideal, money is a big part of everyone’s lives. 

Where to Start

You need a budget. I don’t care who you are or what you’re doing, you need a budget. If you spend money you need a budget. If by some miracle you live at home with your parents, you don’t pay them rent, and they cover all of your other expenses and all you do is work and pull in money, you still need a budget. Budget for the future. There will be a time when you will be spending a lot of money and you will wish you had been budgeting.

Here are my steps to creating a budget:

  1. How much do you make?
    • How much money do you make every month? We need to start off with your monthly income. We’re going to do a pretend budget just to give you a sense of how this should work. Our income is going to be $2000.00 a month. This should be net income. After all of your tax deductions, CPP, EI, etc..
    • Income: $2000.00
  2. Next, calculate your monthly expenses that are the same every month. Below are some example categories and example numbers:
    • Rent and utilities: $700.00
    • Cell Phone Bill: $65.00
    • Internet: $25.00
    • Car Insurance: $125.00
    • Car Payments: $0
    • Gym membership: $50.00
    • Parking: $40.00
  3. Next, add in other required expenses. These are expenses that occur monthly but they may not always be the same. Some examples are…
    • Gas: $100
    • Groceries: $250
    • Do not include things that are optional like going out to eat, buying alcohol, or gifts. These can be worked into the budget once we have deducted our necessary expenses. You can look at the things above for the last two or three months and average it out to get a number that is accurate.
  4. Finally, you need to go over your account statements for a typical month. For example, if last month was December, don’t use that month because that likely won’t accurately represent your monthly spending. Add up different expenses and sort them into categories. Here are some examples.
    • Coffee: $40.00
    • Restaurants: $50.00
    • Clothing: $50.00
    • Gifts: $0.00
    • Recreation (movies, dates, etc): 0.00
  5. We are now going to add up all of our expenses and subtract them from our income.

 $2000 (income)

  • $1005.00 (recurring expenses)
  • $325.00 (Variable Mandatory Expenses)
  • $140.00 (Optional Expenses)


Total: $530.00

As you can see, with this budget you will have 530.00 left over every month to save. Ideally, because you have already factored in other monthly expenses, you should save every penny of this, especially because it is not a ton of money. I don’t like to say “you have 530.00 left over at the end of the month”. “Left Over” implies that you can spend that money on anything you want. That is not true. This is money you should be saving.

You might be asking, great I made a budget, now what? How does this help me?

Well, you now know exactly how much you’re spending and where it is going. It is important to determine your financial goals. Ideally, speaking for myself, I would like to save as much money as possible and in order to do this, I would have to cut out some of my unnecessary expenses. 

  1. Determine where you can cut down. 
    • Coffee– Personally, I spend way too much on coffee. Especially since that 40.00 is on top of what I spend on coffee in my grocery bill. If I could cut my coffee spending down even just by half (ideally I could eliminate it completely), it would be an easy way to save 20.00.
    • Restaurants– this is a very easy way to spend money and a lot of months I have spend a lot more than 50.00 eating out. The simple answer here is: don’t eat out. If you want to spend a bit more on groceries to eliminate eating out I highly recommend it. The amount extra that you would need to spend on groceries to eliminate eating out is far below what you would actually spend at a restaurant. Do your wallet a favor. 
    • Gym Membership– This is another place you can cut down on spending. You could try doing at home workouts and running outside. If this isn’t feasible for you, then this is something you could keep and try to cut down in other ways.
    • Car/Gas: If you want to cut down on car/gas costs you could try biking or taking the bus to work in the summer.

When you decide where you can cut down, do so, and then put that extra money into savings. I know that I make it sound simple but if you have a larger family it can get pretty expensive. I would recommend making a spreadsheet to track your spending month to month.

Thanks so much for visiting my blog! I hope you enjoyed this post and if you enjoyed it please follow my blog for more!

Published by Brooklyn

Just a recent university graduate sharing her love of reading! In my free time you'll either find me reading or working on my novel!

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