Does the idea of maintaining a personal budget give you the blues? Whether you’re just getting started or trying to move further ahead on your path to financial wellness, maintaining a budget is key. But budgeting doesn’t have to be a drag! With some basic principles you’ll be on your way to living within your means today, while still saving for your dreams tomorrow.

Budgeting isn’t about eliminating the things you want to have, it’s about understanding where you’re spending your money so that you’re living within your means.

Take An Honest Look at Where You’re Spending

To get started, you need to have a strong sense of where you spend your money every month. Do you track how you spend, or do you tap and go? According to Mary Kondro, ATB Branch Manager, “We are part of generation Now; a lot of us don’t carry cash. We’re using debit and credit cards and not making tangible cash transactions, which can make it more difficult to track how much you’re spending.”

Start by taking a realistic look at your total monthly income (the money you’re bringing in), and then list your different types of expenses (the money that goes out of your accounts every month - be realistic!). You can use a tool like the ATB Budget Worksheet to keep track of everything.

Slim Down Your Spending with a Cash Diet

In some situations, Kondro recommends going on a “cash diet” so that you can get a good sense of the money you’re spending every month. “A cash diet will give you a great reality check of where you’re spending your money, and how much. “You’ll actually withdraw the cash, put it into different envelopes, and label what each envelope is for”, she continues, “You’ll have different envelopes for different items in your budget, and when the cash is gone, it’s gone. You’ll either need to take it from another category or forego that expense until the next month.”

A cash diet helps you evaluate how much money you need in each category, and will make each purchase a conscious one, instead of a “tap and go” mentality.

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Use the 50/30/20 rule

Once you have a good sense of where you’re spending your money, you’ll want to apply the 50/30/20 rule to develop your budget moving forward. This rule divides your monthly income into needs, wants and goals. As a rule of thumb, you’ll want to set up your budget as follows:​

As your income grows, the 50/30/20 rule will still apply, but you’ll have more capacity in each category. It will also help you plan your expenses and feel in control of your spending. For example, if you enjoying buying a lot of gifts for friends and family during the holiday season, you may need to forego some other expenses that month and the month before to keep your spending in check.

It’s all about balance, by ensuring you’re not regularly spending more than you’re bringing in, addressing your needs today, and making sure you have enough saved for tomorrow. If you feel like you’re consistently falling short, you might consider earning second source of income or working on getting a promotion at work so that you’re living within your means.

Starting Early Pays Off

The 50/30/20 rule can also help you evaluate life’s big changes, such as getting a post-secondary education, moving out on your own, purchasing your first home or starting a family. You can use your budget and the 50/30/20 rule to make sure you can still live within your means, even as life changes.

Getting into the habit of saving early in life can really pay off, by letting compound interest work for you over a longer period of time.

Creating healthy budgeting habits today will help you be a savvy saver and spender for a lifetime.

Check out ATB’s personal good advice section for more advice, tips and tricks.