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3 steps to drawing up a monthly budget

  1. Know what goes into your pockets and what goes out
  2. Structure your budget
  3. Take stock

Do you find yourself often in the red at the end of the month but don't know why?

Drawing up a monthly budget will help you know exactly what goes in your pockets and what goes out. It takes a little planning at first, but you will have the satisfaction of getting a clear picture of your spending as compared to your income.

Here's how to do it, in 3 steps.

Whether you are a salaried employee, self-employed worker or retiree, make a detailed list of your income: pay, tips, bonuses, commissions, annuities, investment income, etc.

Making a list of your expenses may be a bit challenging at first, but actually knowing where your money goes is the key to effective financial management.

Of course, you know how much you spend on your rent or mortgage, and you know roughly how much you spend per week for groceries. But then there is everything else—and that's often how you end up in the red.

To get an accurate picture of your spending, use these 2 strategies together.

Go back 1 year

Print account and credit card statements for the last 12 months or ask your financial institution for them. You'll have a portrait of most of your expenses, bill payments and cheques.

Gather up any bills you've kept, as you can use them to record your purchases for recent months.

Write down all spending for the next few months

Keep track of every cent. This may seem tedious at first, but the idea is simply to develop a habit that will be part of your daily or weekly routine. Here are some tips that may help.

  • Each time you buy anything, keep the receipt. Whether it's a coffee, magazine or CD, everything should be recorded.
  • At the end of each day, put all receipts in an envelope or folder dedicated to that purpose. Enter your data every day or every week on a computer spreadsheet that will give you the totals automatically.
  • At the end of the month, review your account and credit card statements: you can catch any expenses you missed.

Tools and tips

Why some budgets don't work

The success of your budget is based on accuracy and discipline.

Read tip - Why some budgets don't work

For your budget to be complete, it must include 4 types of expenses.

Weekly expenses: Groceries, pharmacy purchases, dry cleaners, gasoline, and outings (restaurant, cinema, etc.).

Monthly expenses: Payments for housing, electricity and gas, insurance, car payments, public transportation, communications (telephone, cable and Internet).

Annual expenses: Driver's licence, registration, car maintenance and repair, insurance (auto, home, life insurance, etc.). Clothing, recreation, vacations and furniture. Home maintenance and repairs if you are a homeowner. Divide these expenses by 12 for a monthly figure.

Savings and investments: This money is used for special projects in the medium term for such items as renovations and retirement savings. It's also used to repay loans.

A budget includes fixed expenses (housing, car loans, monthly bills, etc.) and variable expenses (groceries, gasoline, clothing, recreation, travel and other).

Once you have a clear idea of your income and expenses, insert the monthly data in a computerized budget table (PDF, 227 KB). This will give you a picture of your monthly situation.

Whether your budget is balanced, in deficit or showing a surplus, it's important that you set realistic goals.

Tools and tips

Your budget

This tool shows you how to calculate your earnings and expenses, and draw up a monthly budget balance sheet.

Make budget - Your Budget

Determine how much to allocate to each expense category

This calculator can help you determine how much you need to cover all your expenses.

Do the math - Determine how much to allocate to each expense category

Why some budgets don't work?

Read tip - Why some budgets don't work?

My budget tool

Available exclusively to Desjardins caisse members, the My budget management tool gives you an accurate picture of your everyday income and expenses.

Learn more - My budget

If your budget is balanced

Congratulations! Maybe you can optimize it by analyzing the distribution of your expenses. For example, the maximum percentage spent on housing should represent 35% of your gross income.

Use the tool to calculate the amount to allocate to each spending category to see if your expenses are optimally distributed among the spending categories.

Depending on the result, you may decide to save a little by reducing some of your expenses. Or realize that your car is costing you more than you thought.

If your budget is in deficit

Don't be discouraged. At least you now have a clear idea of your situation, which is the first step to taking financial control.

A number of solutions are possible: cut back on some expenses, lower your credit and interest costs. The important thing is to go slowly and set realistic goals.

Use the My budget management tool. To set realistic budget goals and have accurate picture of everyday income and expenses, use the My budget tool.

Don't hesitate to get help. Several financial institutions and agencies offer free budget counselling (Option consommateurs, ACEF).

If your budget shows a surplus

Congratulations! There are options available to help you carefully plan the use of your extra funds.

Would you like to invest in your RRSP, buy a house, try your luck on the stock market or prepare a sabbatical? Anything is possible when you're disciplined—which you already are! Maybe the advice of a financial planner would be helpful.

Tools and tips

Determine how much to allocate to each expense category

This calculator can help you determine how much you need to cover all your expenses.

Do the math - Determine how much to allocate to each expense category

List your debts and make a repayment plan

Use this tool to establish your debt payment priorities. .

Do the math - List your debts and make a plan to pay them off

How to calculate your debt-to-income ratio

A simple way to assess your true financial situation.

Read tip - How to calculate your debt-to-income ratio

How to reduce your interest costs?

Tips to keep control of your credit cards.

Read tip - Lowering your credit card fees

The Desjardins Personal Financial Index

Measure your financial skills and knowledge.

My index - Budgeting, debts, savings, insurance...
My index 2 - Have you taken control of your finances?
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