Why create a budget?

It is easy to let spending get out of hand, an extra drink at the bar, splurging on a long weekend get away or indulging in the new iPad that you just don’t need.  No one ever said you should count pennies but being smart about your money is always a good thing.  Having a budget can mean finding a way to put money aside for an important purchase or creating a cushion for the future when you might want to buy a home, go back to school or whatever your heart desires.

Does it really work?

Creating a budget and using it to balance your spending and saving does work!  If you are honest about your income and spending and stick to it, at the worst you will have a clear understanding of your money habits and know how you can change them.

What do I have to consider?


The first thing to consider when developing a budget is your income.  Your income is whatever money you have coming in from work or other source of income.  It is easiest to develop a monthly budget because of the way many expenses are calculated, so try to determine what your monthly income is.

Fixed Costs

These costs are costs that do not change from month to month and are usually the necessities of day-to-day life.  Examples include monthly rent, gym membership, phone bill, mortgage or loan payments, car payments and more.

Variable Costs

These costs are the ones that are not consistent from month to month.  Variable costs are often the costs that you can cut later on if you are trying to save money and may or may not include necessities.  Examples of these kind of costs are entertainment, medical bills, credit card bills, clothing or groceries.  Variable costs can be the hardest to keep track of and fluctuate easily.

How to do it!

To build a budget, you have to add up all your sources of income and subtract your known fixed and variable costs.  What you are left with at the end of the month is the total of your potential savings.  If this number is negative, it means that you should probably start trying to cut unnecessary expenses so that you don’t start owing money!  By listing all your expenses you will be able to pin point exactly where you can cut costs.

Our recommendation is to build a realistic budget.  Write down all your expenses for one month and then look at the big picture.  You may be surprised to realize that so much of your money goes to shopping or coffee.  You can then find smart ways to cut down!

For a ready to fill in personal budget, check out our Personal Monthly Budget tool in the Tool section!

Tricks to make it work

If you want to build a good budget there are some things to do to make it happen and see it through!

Dedicate specific time

Find a specific time every day to write down your expenses, like right before bedtime or after dinner when your day is almost over.  If every day is too often, take notes throughout your week and tell yourself that on Sunday nights you will compile everything.  It is like making a date with your internal accountant – stick to it!

Do it with someone else you trust

If you need the motivation to follow through with developing a budget, get someone to do it with you.  When you have someone else to check in with like a roommate, parent or friend, you will stay more motivated and have someone giving you constant reminders or encouragement.  Money matters can be a sensitive issue so make sure that if you are sharing your new budget with someone or asking for advice, its someone that you trust.

Be patient

Creating a good budget takes time, so be patient.  It takes dedication to track your expenses, each day for a month, especially when you are counting every coffee, trip to the movies and bus ride. Just remember that understanding your spending habits is important and may help you achieve your financial goals and stay in control of your money.

Design My Move has actually designed a tool specifically to help you with creating your first monthly budget – Check it out in the Tool section!

To find out how to cut costs and save money, check out our article on ”Easy Ways to Save”.