Creating a Budget

A family budget helps you to buy the things you really need while staying within your income. Creating a budget for your family is not difficult, but it does require some effort to start, as well as participation from all family members.

Steps to Creating a Budget:

  1. Gather together your spending information. Pull out old bank and credit card statements to find information on the last three months of income and expenses. This is an important first step in making a realistic budget. By having this information, it is easier to accurately estimate the cost of your expenses. Anything you are unsure about, look at statements and receipts to make an educated guess.
  2. Know your income. List all the places and amounts that money is received from. Include money received from paycheques, Canada Child Benefit (CCB), pension, insurance, child support, etc. It is important you build your budget on your base take home salary. Overtime, tips and irregular bonuses should not be included when calculating out budget income amounts because of the uncertainty of the income dollar amount.
  3. List all the items/amounts that money is spent on. It helps to think of monthly expenses first, then think of yearly ones, or expenses that only happen occasionally (like tuition, property taxes, insurance, gifts, vacation). By grouping expenses according to how often they are paid (weekly, monthly, yearly), you will be able to keep better track of what money you need, and when it is needed to make payments.
    Occasional expenses (ones you don’t pay very often) still need to be listed on your budget with a dollar amount in your expense list so you can set aside a certain amount of money each month to be ready for the expense. For example, yearly expenses like tuition can be divided by 12 to find the monthly amount that should be budgeted to be prepared to pay when it is due. Read more in Understanding Your Expenses.
  4. Decide on a budget time period that works for you. Most people find it easiest to set up a budget to either match their pay periods, or for one month. To start, try budgeting for one month at a time and once you have mastered the skill of budgeting, you may want to plan for larger periods of time (including multiple pay periods).
  5. Create a budget using your income and expenses. Use a spreadsheet like our Budget Plan Worksheet or print a lined table like our Budget Plan, to create a document that shows all income and expenses. This is a place to assemble all the information you have gathered and set up your budget.
  6. Continue to track all of the money received and spent. If there are multiple people spending in the household, it will be helpful to keep all receipts and use an envelope method to track expenses. If you like to track your money in a visual way, use the calendar method to mark income and expenses on a monthly calendar on the days they actually occur. As a third option, there are also many personal finance apps and software to track spending. You will be able to see if your budget numbers are accurate or if they should be adjusted after you track a few months of spending. Read more about the different methods of tracking expenses in Tracking Expenses and Record Keeping.
  7. Review the Budget Plan and revise each month. Update the information in your budget based on actual numbers. Your budget will be more accurate with a monthly review.
  8. Compare your income and expenses to better understand your financial situation. Your completed Budget Plan is a tool. Use the numbers to guide your decisions on how to make changes to improve your finances and plan for the future. Do you need more income? Can you cut out some optional expenses? Is there money being put into savings? You can make better decisions for your family if you have a clear picture of your spending. Once you have the most accurate information you can gather about your finances, you can set realistic goals and plan for the future.

How to Use Budget Plan Numbers

Income is greater than Expenses

If your budget balance is a positive number, then your income meets all of your expenses and you have a cash surplus. This is great! Extra funds can be added to savings or put toward a future goal.

Income is equal to Expenses

If your budget balance is ZERO, then your income equals your expenses. This is good too. Start setting aside any extra money to save for unexpected expenses that come up. Aim for an emergency savings of two to three months earnings so you can handle any unpredicted expenses without too much trouble. Keep this money separate from your regular account so it is there for you if you need it. Read more in Saving Money: How Much and What For.

Income is less than Expenses

If your budget balance is a negative number, this is called a budget deficit. There are more expenses than income, and you will need to make changes in order to live without going into debt. This is the point where you will need to go back and rework the budget.

Please read Help! Expenses are more than Income for ideas on how you can rework your budget and improve your financial situation.

Remember a budget is a tool that can help you understand your finances and improve how you use your money. As your situations change, you will need to revise your budget around things like different income, different needs or new goals.

Don’t be discouraged if your budget plan doesn’t work out the first time. A budget is something you continue to work on and review until the results work for your family. When you are working on the budget, involving all the family members that make money decisions in your house will improve the chance of success in making it accurate and sticking to the plan. Creating this type of spending plan will also give you an opportunity to talk with your family about goals for the future. Children can play a part in the decision making. Giving a child an allowance and having them decide on how they wish to spend the money is great practice for budgeting when they start to earn their own money.

Seek help with your finances if you are stressed about your budget.

Non-profit organizations like the Credit Counselling Society can provide free advice and help with your budget.

If you live in Manitoba and need help with accessing benefits, call the Community Financial Helpline:
431-813-4357 call or text
Toll-free number 1-855-955-4234
Facebook Page:

The Community Financial Helpline can:

  • Provide information and assistance to apply for government income supports
  • Connect you to organizations providing tax filing services
  • Refer you to other community supports including financial coaching & counselling, getting ID’s to access benefits and opening bank accounts.

Article to Read Next:
Help! Expenses are More than Income