The following video from the Financial Consumer Agency of Canada (FCAC) provides a step-by-step guide on how to prepare a budget:

Important points from the video:

• The first step to financial success: Understand that you are in control of your financial future.
• Budgeting doesn’t have to be hard, complicated or full of sacrifice.

Why budget?

1. Budgeting is the first step to managing your money. How well you manage your money determines what you can do and where you can go in life.
2. Having good money management skills allows you to:
• Save money
• Plan for your future
• Pay off your debt
• Achieve financial independence
• Become a wise consumer
3. When you create a budget, you are assured of financial control and peace of mind.

Steps in creating a budget

1. Add up your monthly income
   Review what you make and add up your sources of income
2. Add up your monthly expenses
   List your expenses – fixed, variable and irregular
3. Subtract expenses from income
• If you have a surplus:
• Start an emergency fund
• Use as extra loan payment
• Savings
• If deficit:
• Cut back on non-essential items

You can also use the FCAC Budget calculator to add/subtract your income, expenses and savings or deficit.

Other tips:

1. Track your expenses. The best way is to record them as soon as possible. Keep receipts to keep track of cash payments.
2. Even if you have a surplus, keeping track of expenses gives you a clear idea of your spending patterns and shows you where else you can cut back or save on.
3. Understand the difference between wants and needs then cut back on wants.
4. Remember that small savings add up quickly.
5. Reduce your expenses by taking advantage of seasonal sales, shopping around and negotiating, using free services, and scaling back on the nice-to-haves (replace a product when necessary, not because the newer version came out).

If you are having trouble making ends meet, watch the following video from FCAC entitled “How do I live within my means?” This will teach you how to track your spending effectively, look for savings, and cut back on expenses. It will help you see that small changes in your spending habits will amount to a big difference in your financial future: