Ads keep this website free for you. does not research or endorse any product or service appearing in ads on this site.  Before making a major financial decision you  should consult a qualified professional.

Personal Budget
Canadian Tax and
Financial Information Home

What's New

Links & Resources

Site Map

Need an accounting, tax or financial advisor? Look in our Directory.  Use above search box to easily find your topic!   Stay Connected with!


Home  ->  Free In 30! -> Personal Budget

Making a Personal Budget

Making a budget is usually not much fun, and sticking to it might not be easy.  However, this is an important step.  You must be a good manager of your money in order to have the financial freedom to do whatever you want.

In order to prepare a budget, it is important to track your spending to see what your expenses are.  You can do this on paper, or on the computer in a spreadsheet.  If you don't have spreadsheet software, you can use the free Google Sheets.  You could also use a software program such as Quicken™.

Track your spending by categories such as

bullet savings
bullet rent or mortgage
bullet property tax
bullet house insurance
bullet home maintenance
bullet life insurance (buy term life, until you are financially independent)
bullet disability insurance (if you have none through work)
bullet groceries
bullet clothing
bullet telephone
bullet cell phone
bullet heat & light
bullet cablevision or satellite
bullet internet access
bullet auto insurance
bullet auto fuel & maintenance
bullet other transportation costs - bus, ferry, cabs, etc.
bullet medical expenses
bullet books / subscriptions
bullet household furnishings
bullet gifts
bullet donations
bullet eating out
bullet entertainment

Once you know where your money is being spent, you can allocate a certain amount of money to each spending category.  If you are spending more than you are making, or if you are not using  at least 10% of your gross income to pay yourself first, then you need to reduce or eliminate some expenses.  For expenses that are paid annually, save 1/12th of the total each month.

The first thing you should do (if you don't have debt with over 8% interest) is to get your employer to deduct  your pay yourself first money from your pay, and transfer it directly to an RRSP.  By making this a payroll deduction, the income tax taken from your pay will be reduced.  See our article on Recommended stocks/ETFs for how to make 9% on your RRSP.

You should monitor your progress by periodically making a summary of your net worth.  To calculate your net worth, you simply add up the value of your major assets and any investments, and deduct any debts.  To make this task easier, try our Net Worth Calculator, which can be found on the Calculators page.

Personal Budget
Income Monthly
gross income
net income
Spouse #1 $4,000 $3,040  
Spouse #2 $3,000 $2,375  
Expenses   Monthly  
Pay yourself first money   $700  
Mortgage   2,020  
Car loan   300  
Pay down credit card debt      240  
House insurance   70  
Property tax   120  
Telephone   40  
Cablevision   40  
Internet access   40  
Utilities - heat, light   120  
Home maintenance   150  
Life insurance   100  
Household furnishings   150  
Groceries   400  
Auto insurance   200  
Auto fuel   200  
Auto maintenance   80  
Clothing & accessories   145  
Dining out   100  
Entertainment   100  
Medical/dental/vision care   100  
Savings for new car   0  
Total monthly expenses     $5,415
Remainder     $0


Net Worth Summary

Assets Value
House $300,000
Vehicle 8,000
RRSPs 10,000
Chequing account 250
Total assets $318,250
Mortgage $254,000
Car loan 3,700
Credit card debt 4,800
Total liabilities $262,500
Net worth $55,750

This couple obviously didn't read our website before they took out a car loan and ran up their credit card debt, but they are on the right track now.  They are paying themselves first with the 10% of gross income, which they are using to make extra payments on their highest interest debt (credit card).  They have reduced some other expenses in order to do that.  Once they have the credit card debt paid off, they can pay the $700 per month (pay yourself first) on the car loan.  They will also have $240 more per month from the credit card debt payments, which they can use to pay down their car loan faster and/or allocate to other expenses.  Once the car loan is paid off, they can use the $700 per month as extra payments on the mortgage or to invest in RRSPs, and use the $300 per month car payment to save for a new car.

Tax Tip:  Stick to your budget.

If you do not own a home, you have no debt, and you have already put aside your emergency funds, put a further $35,000 into your RRSP.  This can be withdrawn under the Home Buyer's Plan when you buy your first home.  Any other savings for your down payment should be saved in a Tax-Free Savings Account (TFSA).  Once you own a home, you should use the pay yourself first money to make extra payments on your mortgage, or invest in RRSPs.

Tax Tip:  Pay yourself first.

If you have children or grandchildren, it is never too early to start teaching them how to budget their money.  This can be as simple as giving them an allowance, and teaching them to allocate their money.  When they are very young, start by giving them a small amount of money which can be used for discretionary spending, long term savings, and special occasions.  As they get older, their allowance can increase, and they can be responsible for paying for their own sporting activities, clothing, and gifts.

Tax Tip:  Teach your children to manage money.

See our Save Money page for more ideas.

Tax Tip:  Nobody plans to fail - they just fail to plan!

Your financial plan should include the following steps:

  1. Pay yourself first!
  2. Set aside emergency funds
  3. Define your goals
  4. Personal budget
  5. Buy a home
  6. Get out of debt
  7. Save and invest

Revised: June 30, 2024


Copyright © 2002 Boat Harbour Investments Ltd. All Rights Reserved.  See Reproduction of information from

Facebook  | Twitter  |  See What’s New, stay connected with by RSS or Email
The information on this site is not intended to be a substitute for professional advice.  Each person's situation differs, and a professional advisor can assist you in using the information on this web site to your best advantage. 
Please see our legal disclaimer regarding the use of information on our site, and our Privacy Policy regarding information that may be collected from visitors to our site.