10% of all purchases are donated to Urban Native Youth Association, a local Vancouver organization.


Your Cart is Empty

October 18, 2020 9 min read

For the majority of my life, I thought I had budgeting down. I thought I knew what I was doing. I had spreadsheets that were colour-coded. It had a “budgeted” column, a “spent” column, and a “difference” column so I could see how much I had left (or how much I had overspent).

But the thing is, I never really stuck to the budget. I always had to compensate the next month, by taking money I’d overspent the last month out of the current month. I was always overspending, either on entertainment or on groceries.

Just because you’ve got a spreadsheet, or you use a program like Mint, it does not mean you are budgeting effectively.

In order to make a budget that works, there are a few things you need to do.

  1. Pay attention to how you usually spend your money, on average.
  2. Set small, achievable goals for how you want to reduce your spending.
  3. Create a budget that is realistic based on the above.
  4. Check in with your budget EVERY. SINGLE. DAY.

I know it seems extreme to check your budget every day, but trust me. Do that for just a few months, and then it’ll become habit to the point where you can forget about it every few days or only look at it once a week, because you’re so used to checking it anyway.

But if you don’t make a habit of it right away, you’ll never commit enough.

How to Create a Budget

Okay now you have all that “theory” out of the way… let’s actually make your budget.

This piece is long, but easy. I promise. You’re just copying numbers down. Expect this to take an hour, or less if you’re a math genius (unlike myself).

Also: the YNAB links below are affiliate links, which means if you end up purchasing I will receive a commission. Thanks for your support t!

I personally recommend the You Need a Budget app. It’s really intuitive and it actually teaches you how to use it, too. There’s a free 34 day trial so you can feel it out - you could even try both YNAB and a paper budget at the same time. It’s around $50/year, which may sound like a lot, but trust me - after using it, you’ll save WAY more than that just from knowing what’s going on with your finances. Sign up for the free trial here.

I used to recommend you start with a paper budget to help you create the commitment. I know you’ve probably heard it a million times, but when you write something down it makes a HUGE difference. It just makes it more real, especially if you do check in every day, or at least every week.

BUT. I also know that we busy millennials like our tech, and we like things that make life easier.

So. Use paper for this section, to set up your budget for your reference in case you get confused, but then sign up for the free trial of YNAB here. It’ll make everything so much easier, and you won’t give up due to paper budgets taking too much time.

Now, get out a notebook that you are now going to dedicate to your initial budget and any random finance notes. It doesn’t need to be fancy, but you’re going to look at this often, so make sure you pick one you like!

Note: this step is easy, because you're just copying down numbers, but it MIGHT take a while (depending on what you've got) so take breaks! Don't do it all in one day if you can't. I think this step took me an hour or two, and I did it over a weekend.

The first thing you’re going to do is write out your income. If your income varies, choose the lowest amount you make so that you can budget based on this minimum. That way you’ll be fine if you don’t make a lot in a given month.

So, on your first piece of paper, write the month at the top. Then write your income in the first line.

Here’s an example.

Income: $1,800/month (varies)

Solid! Now, we list our expenses.

Bills - Monthly Fixed Expenses

The first thing you need to do is write down your regular monthly bills. Go through your bank statements (or just go online) and write down every single bill, including the date it’s due and the amount. So for example, here’s what mine looked like when I started this in August 2015:

1st  Rent - $472.50 (my half)
11th Netflix - $9.99
12th Pet Insurance - $41.99
20th Health Insurance - $76.50
23rd Monthly Bank Fee - $12.95
25th Electricity - $65
26th Cell Phone - $68.71
30th Student Loan - $80

Bills total: $827.64

You literally write EVERYTHING out, including any debt payments you make.

Budget Necessities - Monthly Variable Expenses

Then, you need to list other necessities. Look at your bank statement for the last 3-6 months and calculate the average you have spent on groceries and household supplies, gas, and any other regular expenses like pet supplies, internet, insurance, and other bills. This way you’re realistic with your budget, and you won’t give up because you overspent. You could even budget for 10% more so you know you have some extra wiggle room.

For example (leaving out 

Groceries + Home - $400
Vehicle Gas - $120
Pet Supplies/Food - $100

Necessities total: $620

During the second month doing this, my partner and I sat down and discussed how we wanted to split things, so my gas and pet supplies expenses were cut in half. It is SO important to talk about your budget with your partner or roommates, so you can be on the same page — even if your partner’s spending habits are different or you have separate bank accounts!

(Later, we cut our grocery budget in half as well! But that’s a topic for another post of its own.)

Funds - Irregular Variable Expenses

Finally, you’re going to create different “funds” for other irregular expenses, like haircuts, gifts, vacations, and even dental appointments. What I did for this (DO NOT do what I did) is I opened a separate bank account at an online bank and created different sub-accounts in each one for each of my funds. I calculated how much I would need for each item, and divided it into a small amount to put aside each month.

So for hair cuts, I put aside $7 each month, and then every four months I’d have $28 to pull out for my hair cut. Same with vacations — I needed about $450 to purchase flights and have a little spending money when I visited home, so I set aside about $77 each month, because I visited twice a year. (Now we live in the same city, so I’m saving $450 each year. Yippee!)

NOTE: I had seen this method online, and I loved how organized it was, but I wouldn’t recommend doing this exactly how I did. It’s just too many moving parts to have like 13 different transactions in your bank account, to 13 different sub accounts at a different bank.

It’s a lot.

Instead, I recommend two options:

1. Using You Need a Budget, and leaving all your funds in your chequing account. YNAB allows you see ALL the money you have, and then make categories and allocate the money you currently have to those various categories. I’ve created a “Funds” category, and listed each one below that. I just re-allocate each month, and I know I’ve set aside enough money. Here’s what it looks like:

I have more below that screenshot but for the sake of explaining, this works. You can see that in Clothing I had budgeted $84, and spent $84. If you look at Pet Deworming, I’m putting aside $5.36 each month, but it doesn’t actually come out of my account each month. In brackets I’ve entered that I need money for it every 6 months, so I just took the total cost (including taxes) and divided it by six, so I know how much to put aside each month to be ready every 6 months. YNAB actually has a way to set goals based on length of time as well so you can see your progress in a green circle.

I do this for literally EVERYTHING - you can see even renewing driver’s licenses every few years is on there, and glasses every 2 years (fun fact: I have pretty bad vision). 

The reason for this is if you have funds, you’re never screwed over when a big expense comes up because you can be ready for it. I used to ALWAYS get screwed over because I never knew how I could be prepared for “random” big expenses. It seemed like too much to keep track of.

YNAB makes it really easy :)

2. You could open ONE savings account at a bank with high interest rates, or just use another savings account at the same bank you have your chequing account at, to make for easy monthly transfers. After you calculate how much your “funds” will be in total, transfer that lump sum each month. Then, track how much you have in each fund just on paper.

To get started either way, look at your bank statement or go online, and look at the past 6 months, or if you’re ambitious, look at the past 12 months. You’re just looking for irregular expenses.

For each irregular expense, look at how often you have made the purchase. Take the total cost and divide it by the number of months you have between each purchase. That amount is what you need to save each month for that expense.

On that same paper where you’ve got your monthly bills and necessities, list out your funds. Remember, we are starting on paper to begin with!

Here’s an example:

Emergency Fund - $100
Travel/Vacations - $77
Hair cuts - $7
Clothes - $10
Taxes - $20 (I always put aside extra in case I owe)
Gifts - $20
Vet - $7
Printer ink - $10
Vehicle maintenance - $15
Fines/Fees (like late library books) - $5
Stockroom - $50
Dry cat food - $17.50
Dental appointments - $9

Funds total: $347.50

(See? That’s a lot of moving parts if you have to open that many sub-accounts! Way easier to just stick it in YNAB or keep track on paper and use one account, so you can just transfer $347.50 each month.)

Total Expenses: $1,695.14

Now, calculate your net income:

Income $1,800 - Expenses $1,713.14 = $104.86

Net income and net worth are not the same! Net income is how much money you have leftover after paying expenses, and net worth is how much money you "own" - which is why we subtract debts you owe.

And NOW you can decide what you want to do with that net income! (See?! We found money you ALREADY have!)

For me $104.86 could have been a couple dinners out, a couple fun outings, or even a nice purchase for myself. But my goal was to pay off my student loan, so any time I had extra money, that’s where that went. It all depends on your goals! Generally if you’re saving for anything, that’s where your net income goes.


When creating a savings goal (another thing you can do in YNAB, or just on paper) you would put a portion of your net income towards that goal.

You could even create a little graphic and check it off as you go so you can see your progress! YNAB lets you do this easily. You make a category called Savings Goals, and list them underneath. My goal for my Emergency Fund was 2-3 months’ worth of cash so if anything happens, I’m okay for 2 months. I click on the category, enter the goal in the sidebar, and there it is!

What about fun stuff?!

First, look at your finances WITHOUT thinking about fun stuff, so that you can then decide how you want to prioritize your net income. 

My partner and I decided we’d take money out of our grocery budget for going out, so we didn’t have a separate “eating out” budget. We wanted to be really careful, because that year he didn’t have a job and I had debt hanging over my head, even if it was relatively small.

For me, it was easy to fudge on entertainment because at the time I only really hung out with friends who were always saving so it worked out!

But if you need to budget for fun stuff, add in a category for yourself after Funds and Necessities and call it Entertainment. You can have subcategories for Dining Out, Fun Stuff (movies, concerts, etc), Cab/Bus Fare, Video & Board Games, Liquor, etc. Whatever you want.

But bear this in mind: you must use the net income to allocate to those Entertainment categories. 

By that I mean, use that $106.86 to fund your entertainment budget - take 20%, half, whatever, but take it from that number. If you go overboard, you’ll have a negative net income and no extra money. You will be over budgeting and living beyond your means.

If you have a negative net income, you are living beyond your means. You’ll need to either make more money or cut expenses. Don’t worry - the next challenge covers this. :)

WHEW! That’s it. YOU DID IT. That was A LOT. 

Now, go over to Instagram and shout from the rooftops: I DID IT!! (Or y'know just leave a comment on my most recent addition to the grid so I can celebrate with you :P)


Get Your Financial Sh*t Together