Budgeting 101: How to master your finances

Budgeting is a love-hate relationship for most people. Sometimes you love it because it gives you control and structure, sometimes you hate it because it can be frustrating and restrictive (which is one of many reasons why people don’t budget in the first place!).

But it doesn’t have to be that way. Budgeting is at the heart of personal financial success – as long as you can figure out a way to budget that suits your lifestyle. There are a variety of ways to make this happen, such as the 50/30/20 budget, zero balance budget, and many others.

Here, we’ll explain how to create a budget and offer tips on how to make your budget work for you.

1. Track your spending

In a budget, whether it’s for a cell phone bill or tuition, each dollar you have is assigned a category of spending.

Before you start to budget, you need to have a general idea of what your typical spending habits are. For 2-3 months, track and record each spending transaction you make, including everything from your utilities to credit cards.

This has to be the first step, so you know how much money you typically spend on different categories each month.

2. Categorize your habits

Once you have a list of your transactions, categorize each expense as variable or fixed.

Variable expenses

Variable expenses change from month to month. Some variable expenses are more irregular than others, such as dining out or buying clothes.

Others are more consistent, such as how much you spend on groceries or gas. While you’ll probably spend a similar amount on these items each month, it’s unlikely that it will be exactly the same as the previous month or the next month.

Fixed expenses

Fixed expenses do not change from month to month. These are the constant bills that you must pay, such as your phone bill, rent or mortgage, or car insurance.


Depending on your current financial habits, the money you put into your savings might be a variable expense (a different amount each month) or a fixed expense (the same amount each month) – or maybe you’re not saving at all (read on to learn how to improve that!).

3. Factor in your income

Calculate your monthly income (post taxes).

If your income is higher than your expenses, it means you’re ending the month with money in your pocket. This is a great opportunity to increase the amount of money you put into your savings.

If your income is lower than your expenses, it means you’re probably using up your savings or racking up debt on your credit card. This is a good time to reflect on your spending habits and decide where you can make changes.

Once you have this information, you can decide how to adjust your spending habits. You might need to cut back on your variable expenses or find ways to make more money. The goal is to have enough money to cover the categories for the budgeting method you choose.

4. Building a budget

Once you’ve studied your financial habits and have a good understanding of how much money you spend, how much you earn, and the adjustments that need to be made, you’re ready to build your budget.

We’ve broken down some popular budgeting strategies below.

50/30/20 rule

Fifty percent of your money goes towards your needs, thirty percent is discretionary spending, and the remainder is saved.


This method of budgeting assigns every dollar to a job. This usually requires rigorous manual tracing through a spreadsheet or an app that’s paired with your bank account.


This method is a reverse budgeting strategy. In this approach, a spending plan is built around savings goals and money is first paid into savings before used for your other costs.

By putting savings as a priority, you can make sure you’re still hitting your savings targets even in tight months.

Categories from SideKick

Another option is SideKick Card powered by Hero Financials, which does it all. SideKick Card has six categories: General, Living, Eating Out, Travel, Fun, and Shopping.

You can allocate funds according to each category. You cannot overspend on each category because if there are not enough funds in the account, the transaction will not be approved.

Budgeting quick tips

Consider creating a seasonal budget (especially if you’re living in Canada). In the summer you might find you spend more money on outdoor activities, while in the winter you might budget more for movie nights. Alternatively, maybe you spend most of your summertime outdoors in the park, while in the winter you need more money for mountain sports!

Review your budget each month or when life-changing events happen so you can make sure it still works for you. And don’t forget to reward yourself when you reach certain milestones, such as sticking to the budget for three months or hitting certain savings targets.

No matter what budgeting method you choose, ensure that saving is a priority. By being mindful of your spending, you’ll soon find that budgeting is a natural part of your routine – and those financial goals will be easier to accomplish.