Whether you want to have money left over at the end of the month, pay off debt or save more money budgeting is the start of the process. Our guide, along with additional workbooks and supporting resources, can help you budget your way out of money problems.

1. How to Budget
In 6 Simple Steps

2. Table of Contents
The Budgeting Process
Set Your Goals
List Your Income & Expenses
Analyze Your Expenses
Set Your Budget
Manage Your Budget
Revisit & Adjust
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3. The Budgeting Process
Creating a budget isn’t that difficult. It’s
really about following a step by step
process that includes information
gathering and making some decisions
along the way. There is no such thing as
a right or wrong budget.
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4. The Budgeting Process
Our budgeting guide will walk you through
the process – step by step – with additional
resources to help you explore futher.
Download the supporting budget
worksheets – including goal setting,
spending journals, budget tracking and
more.
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5. Set Your Goals
Give yourself a reason to stay on track. Write down
your financial goals whether they are paying off
debt, saving for a new purchase or investing in your
future.
Writing down your goals is a powerful motivator that
will keep you on track when the road gets a little
bumpy.
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Blog Article: 6 Reasons Why You Need A Budget

6. Set Your Goals
Make sure that the goals you set are specific
and measurable, so you can clearly see
whether you are succeeding. You will also want
to make both long-term and short-term goals.
For example:
• I want to pay off $20,000 in credit card debt
within 3 years.
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Blog Article: Budgeting With A Purpose

7. List Your Income & Expenses
This is the foundation to your budget. You
need to know exactly how much money is
coming in and what you are spending your
money on. Every dollar counts. For one
month keep track of everything you spend
money on.
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Blog Article: How Much Do Your Daily Habits Cost? (calculator)

8. List Your Income & Expenses
Gather the information you’ve collected from tracking
your expenses, and compare it against what you are
bringing in on a monthly basis. Remember to include
ALL of your expenses. Divide annual payments by 12 to
get the cost for one month, and also include debt
payments and savings contributions.
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Blog Article: Don’t Forget These Expenses (infographic)

9. List Your Income & Expenses
You may, once you add it all up find you are
spending more than you make. If you continue
on this course, you will continue to add to your
debt.
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Blog Article: Change Your Spending Habits (infographic)

10. Analyze Your Expenses
Next, allocate your spending into different categories:
• Discretionary Expenses: These expenses are not necessary, like vacations, club
memberships and a new pair of shoes.
• Non-Discretionary Expenses: These are expenses that you cannot avoid like rent, loan
payments and insurance.
• Fixed Expenses: These cannot be changed monthly and include items like rent, child care
and mortgage payments.
• Variable Expenses: The amount you pay on these expenses varies month to month, like a
phone bill, entertainment costs, and money spent on clothing.
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11. Analyze Your Expenses
Once you know how and where you are spending
your money, you can look for ways to save. Start with
the easiest costs to reduce – your discretionary,
variable expenses – and work your way up through
the expenses that are more difficult to cut back on,
like your housing costs, loan payments, and
transportation expenses.
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Blog Article: Finding Ways To Reduce Your Spending (infographic)

12. Set Your Budget
Here is where you set your future action plan.
Identify ways to reduce expenses or earn more.
Allocate your income to where you should be
spending it, not where you have been spending it.
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Blog Article: 5 Key Spending Ratios

13. Set Your Budget
You are working to balance your budget to zero. That
doesn’t mean you spend everything you make, it
means you allocate every dollar you make to some
purpose. So if you take home $2,000 you are going to
allocate a total of $2,000 to spending, debt repayment
and savings. If you want to pay off your debt sooner,
you need to spend less.
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Blog Article: The Budgeting Equation

14. Manage Your Budget
Once you’ve set your budget, you must stick to it!
The only way to do so is to track your results. Record
your income and expenses each and every month
and compare them to your budget. If you’re
overspending in some categories, make adjustments.
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Blog Article: Tracking Your Expenses

15. Manage Your Budget
Here are some tips that can help you stay on budget:
• Avoid Temptation: If you are an impulse shopper, leave your credit cards at home.
It’s hard to blow your budget when you only have a finite amount of cash on hand.
• Use the Envelope System: Withdraw the money you have budgeted for daily living
on your payday, and allocate the cash into different envelopes for your groceries,
entertainment, personal items etc.
• Don’t Count on Windfalls: If your income tends to vary, make any estimates on the
low side. Don’t count on your bonuses, tax refunds or other unreliable sources of
cash.
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16. Revisit & Adjust
A good budget, one that you will stick with,
should never be cast in stone. Budgets
should be flexible. Life changes as do your
priorities. You need to give yourself some
flexibility to make adjustments, to deal with
the unexpected, and sometimes to fail.
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Blog Article: Why Budgets Fail (infographic)

17. Revisit & Adjust
Budgeting in a circle allows you to
revisit your goals and priorities. These
are likely going to change as you
solve your money problems and
move on to the next stage on your
way to financial freedom.
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18. Learn how to budget your way
out of money problems.
Download our FREE eBook
www.moneyproblems.ca