Saving and Investing
Budgeting 101
Simple steps to help you kickstart your own budgeting practice.
By ATB Financial 27 February 2023 2 min read
Creating a regular budgeting practice that works for you is the foundation to financial wellness. With some basic budgeting principles, you’ll be equipped to enjoy what you love today while saving for what’s possible tomorrow.
See where you’re spending
Start creating your own budget by getting a sense of where you spend your money every month.
Mary Kondro, Senior Leader of Estate Advice team
To build your budget, start by looking at your total monthly income (the money you’re bringing in), and then list your different expenses (the money that goes out of your accounts every month). Try tracking your transactions with an app like ATB TrackIt—when all of your transactions are automatically categorized, it makes it easier to keep track.
Use our budgeting worksheet or create one yourself. We recommend completing the worksheet before moving on so you can apply the rest of the advice below in real life.
Free interactive worksheet
Download the interactive sheet to calculate and categorize your monthly expenses and learn more about your spending habits.
Use cash to reduce your spending
In some situations, Kondro recommends cash stuffing or using the Envelope System so that you can get a good sense of the money you’re spending every month. “Cash stuffing will give you a great reality check of where you’re spending your money, and how much. You’ll withdraw the cash, put it into different envelopes and label what each envelope is for,” she shares. “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 go without that expense until next month.”
Cash stuffing helps you evaluate how much money you need in each category, and will make each purchase a conscious one. As you give this a try, remember that budgeting isn’t about eliminating the things you want. It’s about understanding where you’re spending your money so that you’re living within your means and using your money in a way that aligns with your values and goals—both now and in the future.
50/30/20 rule
Use the 50/30/20 rule
Once you know where you’re spending your money, apply the 50/30/20 rule to develop your budget moving forward. This rule divides your monthly income into needs, wants and savings. Set up your budget like this:
As your income grows you can still apply the 50/30/20 rule, but you’ll have more capacity in each category. It can also help you plan your expenses and feel in control of your spending.
It’s all about balance. By not regularly spending more than you’re bringing in, you’re addressing your needs (and some wants) today, while making sure you’re saving for tomorrow.
Finding yourself overspending regularly? Try making some adjustments, whether that’s taking on a second source of income or making some lifestyle changes so you can prioritize what’s most important to you while managing your money.
Starting early pays off
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. Watch this video for an explanation of compound returns.
The 50/30/20 rule can also help you evaluate life’s big changes. You can use your budget and the 50/30/20 rule to make sure you can still live within your means while using your money for what matters to you as your life shifts.
Whatever you’re hoping for now or in the future, we’d love to make it possible together. Connect with an advisor to get answers to your questions, create a personalized budget or receive the expert advice you need.
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