As you approach the end of high school, you have several options, including pursuing your education or entering the job market. No matter what you decide to do, you will become more independent, which means managing your time and money. Making a personal budget is a good way of keeping your finances under control.
A personal budget lets you evaluate your income and expenses. You can make a budget to save for unexpected expenses, cut back on expenses, save for your future plans, pay off debts, pay for your studies and more.
Before you make a budget, it is important to know the different types of expenses.
These expenses need to be paid on a regular basis (weekly, monthly, yearly) and the amount is always the same.
Paying Rent, Cellphone, Internet, etc.
These expenses can change over time, and the amount might be a bit different each time.
Groceries, sports and cultural activities or shoes and clothing
Some variable expenses, such as buying a fridge or a computer, require a lot more money. You can estimate how much a purchase will cost you and spread it out over several months in your budget.
These are expenses that cannot be reduced in the short term.
Paying rent.
These are expenses that can be changed in the short term.
Going to the movies or a restaurant
To make a budget, you have to take into account your income and expenses.
Here is a table with different possible expenses. These expenses vary from person to person depending on their status. For example, students and full-time workers do not necessarily have the same expenses. Your expenses at the end of high school will be different from your expenses 10 years from now.
|
Expenses |
Examples |
|---|---|
|
Housing |
Rent, electricity, heating, home insurance, laundry, etc. |
|
Food |
Groceries, restaurants, coffee, snacks, etc. |
|
Communications |
Internet, cellphone, streaming service, etc. |
|
Activities |
Sports, movies, etc. |
|
Health and personal care |
Hairstyling, cosmetics, dentist, optometrist, physiotherapist, psychologist, medication, etc. |
|
Transport |
Public transport, parking, gas, car payments, car insurance, car maintenance, taxi, driver’s licence, registration, etc. |
|
Personal expenses |
Vacation, gifts, clothing, etc. |
|
Tuition fees, books, computer, etc. |
|
|
Including savings in your budget makes it easier to put money aside for when you will need it. |
|
|
Credit cards, lines of credit, loans, etc. |
These are different types of income that can be included in your budget. Again, sources of income vary from person to person.
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Tips
-
Registered Education Savings Plan (RESP)
- Personal savings
-
Family contribution
-
Gifts
When setting up your budget, decide if you are going to make a weekly or monthly budget. Depending on what you choose, you need to do some math to make your expenses and income fit into the same timeframe.
For example, if you are paid every two weeks and decide to prepare a monthly budget, you will need to take your net pay amount, divide it into 14 days and multiply the daily amount by the number of days in the month.
Net pay: $1250
$1250 ÷ 14 = $89.29 (daily wage)
$89.29 × 30 = $2679 (income for a 30-day month)
Here is the Government of Canada Budget Planning Grid to help you plan your budget.
Once you have taken a look at your expenses and income, there are three possible types of budgets.
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A deficit budget, in which expenses are higher than income (expenses > income)
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A balanced budget, where expenses and income are equal (expenses = income)
-
A surplus budget, where expenses are less than income (expenses < income)
After taking a look at your expenses and income, you should ask yourself some questions.
In the case of a deficit budget, you must consider how you can reduce your expenses or increase your income.
Even with a balanced budget, you should ask yourself similar questions, since having money set aside allows you to be better prepared for the unexpected, such as car repairs or the loss of your job.
Finally, in the case of a surplus budget, it is important to consider what you will do with the extra money. It may be a good time to think about saving.
It is recommended to have an “emergency fund,” meaning that you have an amount of money set aside to meet your needs for three months. This buffer enables you to handle unexpected events.
It is not always easy to make a budget, because some expenses are more difficult to estimate than others. Variable expenses are harder to estimate than fixed expenses.
A little tip to evaluate your variable expenses is to keep track of all your transactions for a month by looking at receipts and debit or credit card statements. This will give you clear and complete references to better define your budget.
It is important to keep your budget up to date and add new expenses or income as needed. You should also review your budget every three months or so to make sure that everything is still on track.