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That dreaded “B-word” – budgeting!

However, the word budget has gotten a bad rap. When it all boils down, a budget is just a plan for your money. As such, budgeting means that you’re spending with purpose before the month begins. Unfortunately, many people view a budget as a straitjacket that will keep them from doing what they want.

Having said that, it couldn’t be further from the truth! A budget doesn’t limit your freedom—it gives you freedom as it’s really all about being intentional with where your money goes!

When you start planning your budget, bear in mind that your wants and needs position is totally unique to you.

Notwithstanding that, there are “Guidelines” that you may wish to consider (see diagrams above).

How to Make a Budget

Budgeting Tips

Step 1: List your income.

Start by listing the money you plan on getting during that month such as normal salary (for you and your spouse). Also include anything extra such as money from a planned garage sale, freelance job, tax refund or side hustle.

Step 2: List your expenses.

Next, list out your expenses, starting with the four main ones. That’s food, utilities, rent/mortgage payments and transportation.) Then list all the other monthly expenses such as debt repayments, insurance, savings, entertainment and any personal spending.

Step 3: Subtract your expenses from your income.

What happens if you do the maths and have extra left over?

Simple – don’t just leave it, or you’ll spend it here and there without even thinking! Give it a job. For instance, put it toward reducing a debt or set aside for something you know is coming at you, e.g., Christmas, a birthday!

What if you get a negative number? That’s okay. However, you will need to cut back on the extras or pick up extra work to cover it. Just make sure that picking up extra work never means blowing that money. Put it to work to make your budget work!

Step 4: Track your transactions.

Strong Tip: The way you’ll really win with budgeting is to track your transactions. This means that you put every expense and every bit of income into your budget for the entire month.

The reason being is that this helps you stay accountable to yourself, your spouse (if you’re married) and your money! You aren’t hiding spending from anyone. And you shouldn’t overspend because you’ll know what’s left in every budget line.

Step 5: Make a new budget before the month begins.

This is so important as this is when you get ready for everything coming your way next month. Remember – every month is different. So, make a new budget—every single month.

To help you on your way to successful budgeting – two things:

  1. Use this Budget Planner;
  2. Consult with your Wealth-IQ financial adviser in case there are things that you haven’t accounted for (such as a pending change in debt circumstances).

Budgeting Tips

budgeting calendarBudget to zero before the start of the month

This means that, before the month even starts, you’re making a plan and giving every dollar a name. It’s called a zero-based budget. By this, it doesn’t mean you have zero dollars in your bank account. What it does mean is that your income minus all your expenses equals zero.

Do the budget together

If you have a partner, sit down once a month and have a family budgeting night. Make it fun! Maybe grab some of your favourite snacks and put on some good music to help you focus.

You need to get on the same page with money. So, set goals together and dream about what the future will look like.

And if you’re single, find someone who can act as your accountability partner and help you stick to your goals!

Remember that each month is different

Some months you’ll have to budget for things like back-to-school supplies or routine car maintenance. Other months you’ll be saving for things like holidays and birthdays, for example. Regardless of the occasion, make sure that you prepare for those expenses in the budget. Doing this will help keep those special occasions from sneaking up on you. Therefore, pull up your calendar while you’re creating your budget.

Be sure to adjust your budget each month as things change. Make a savings fund you can stash cash in throughout the year. When you don’t have a plan, you’re going to be stressed. And that takes all the fun out of giving and celebrating. No one wants that!

Start with the most important categories first

Your four main categories to consider are food, utilities, shelter and transportation. As well as these, savings should also be at the top of your list. Once your true necessities are taken care of, you can fill in the rest of the categories in your budget.

Pay off your debt

If you have debt, paying it off needs to be a top priority. Get rid of debt as fast as you can. Be brutal! Get mad at it! Stop letting debt rob you of the very thing that helps you win with money – your income.

Don’t be afraid to trim your budget

Brace yourself! It might be time for some budget cuts in your life. For instance, if things are tight right now, you can save money quickly by dining out less and shopping at discount clothing and grocery stores. All being equal, your budget cuts will only be temporary and you can always make adjustments later on.

Make a schedule and stick to it

While you’re making a budget part of your monthly routine, why not pick specific dates for other expenses? As an example, you could set up periodic debits out of your account to pay your bills. Or you could buy your groceries on a set day every week or twice a month. The thing is, when you know what to expect and when to expect it, you take a lot of stress and potential problems out of the picture.

Track your progress

It’s important to check your progress from time to time. If you have a live-in partner, get together and talk about your goals. If not, find someone to check in with. Talk about how budgeting is helping you move forward. Also, think about how you can tighten spending or maybe even pick up extra income so you can achieve those goals faster. And don’t forget to celebrate the small wins.

Create a buffer in your budget

Where possible, put a small amount of money aside for unexpected expenses throughout the month. As such, you might label this as your “miscellaneous” budget. That way, if/when something unexpected arises, you can cover it without taking away money you’ve already put somewhere else. Additionally, keep track of expenses that frequently end up in this category. Eventually, you might even want to promote them to a permanent spot in your budget.

Cut up your credit cards. Repeat – Cut up your credit cards!

If you’re really committed to sticking to a budget and getting out of debt, you need to ditch those credit cards for good. Stop using them! Cut them up, shred or burn them! Whatever you do, get them out of your life.

Stick to using your debit card or even cash. You know what the great thing about a debit card is? The answer is that the money comes straight out of your bank account! Hence, there’s no “middleman” charging you 15%, 19% or even 23% interest.

Using envelopes as budgeting toolUse cash for certain budget categories that trip you up

If you’re constantly overspending on your grocery budget or fun money, cash out those categories and use the envelope system to hold you accountable. Just go to the bank and pull out the cash amount you’ve budgeted for that category. Therefore, once the cash runs out, stop spending! And the good news is that it becomes the ultimate accountability partner.

Try an online budgeting tool

Perhaps pen and paper (or spreadsheets) aren’t your thing. So, it’s time to join the 21st century and use a budgeting tool like this one. By its very nature, this will help you focus on planning a budget and tracking your spending from the comfort of your smartphone or laptop! Also, you can sync up your budget with your spouse, which is great for keeping that communication open.

Be content and quit the comparisons

You have much more than you realise. So, don’t compare your budgeting situation to anyone else’s. Hence, keep moving forward and doing what’s right for your family.

Have goals

Whether you’re paying off student loans, building up your savings, or paying off your mortgage, you need to focus on your why. What’s the reason you’re making these sacrifices?

Give yourself some grace

It can sometimes three to four months to get a handle on this whole budgeting thing. It’s doubtful that it will be perfect the first time or the second (there’s a challenge for you!). However, you’ll get there!


Your Wealth-IQ financial adviser is readily available to help you with your budgeting. So, get in touch if you would like a helping hand.