Budgeting methods that keep it simple

If you're new to budgeting and looking for an approach that's straightforward and easy to stick to, one of the below techniques might be right for you.

The "pay yourself first" budget

• First, determine how much money you bring home each month after taxes.
• Next, decide how much money you want to put toward savings. This includes things like contributing to your RRSP or your children's RESP, as well as saving for a dream vacation or a new car.
• Then, subtract your savings from your total take home — whatever is left over is yours to spend.

This strategy is useful because it doesn't feel restrictive. You simply take what you need off the top, and the rest is yours to spend on necessities and wants. To make this even easier, you can set up automated payments. This way, your savings comes out of your paycheque and goes directly into the correct accounts before you even see or miss the money.

50/30/20 budget

This is another strategy that removes the guesswork from creating a budget. As the title suggests, you divide your take-home pay into 3 main categories — 50% goes toward your needs — food, housing, and transportation, 30% is for your wants — including dining out and shopping, and 20% goes into savings or toward debt repayment.

You can also use the 50/30/20 division as a starting point, and then you can adjust the percentages based upon your income and savings goals.

Budgeting tools

Whether you're looking for a high-tech budgeting solution or prefer a more low-tech approach, there are a number of tried-and-true budgeting tools that are super simple to adopt.

Apps

Goodbudget is an app that uses the envelope system for budgeting. With this system, you create various digital envelopes — you might have one for groceries, one for rent, one for gas, etc. Then, you decide how much money you want to assign to each category. When the envelope is empty, that's your cue to stop spending. The idea is to proactively determine how you are going to spend your money, rather than reacting after you overspend.

Software

IYou can also check out different budgeting software platforms like You Need A Budget (YNAB).

YNAB uses 4 simple rules for budgeting:

1. Give every dollar a job — because when you have a plan, there's no need to stress.
2. Embrace your true expenses — start saving for anticipated expenses early.
3. Roll with the punches — if you overspend in one area, don't fret. Simply re-adjust your budget in a way that works for you.
4. Age your money — spend less than you earn so that you develop a surplus. The goal is to use last month's money to pay for this month's expenses.

Financial Consumer Agency of Canada (FCAC) Budget Planner

The Government of Canada offers a free budgeting resource that you can access through their website Opens in a new window.. It helps you create a personalized budget based on your employment situation and lifestyle. When you've completed your budget, you can compare it to that of the average Canadian. This resource also offers helpful suggestions to assist you in reaching your financial goals.

Envelope system

On the low-tech end of the spectrum, consider the envelope system, in which you simply label envelopes with different budget categories including rent, food, gas, etc. Put the allotted amount of cash into the corresponding envelope each month. Like the digital version, the goal is to plan where you want to spend your money — and how much you are willing to spend. Working with cold, hard cash also helps you visualize exactly how much you're spending on various buckets each month.

Excel

Are you a whiz with spreadsheets? If so, there's no need to rely on a fancy platform for a budget. You can create your own simple budgeting spreadsheet, complete with projected expenses and estimated averages in various areas of spending. If you're not an Excel genius, a quick web search will turn up several downloadable budgeting templates. Make sure you look through a few to find the one that best suits your needs.

If you're ready to break the cycle of living paycheque to paycheque and bring order and calm to your financial life, it's time to find a budget that works for you. Take the first step today and try out some of these simple budgeting methods and tools.