This content is provided through a paid partnership between Moving2Canada and Scotiabank.
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The right budget can help you navigate your finances in Canada with confidence. The challenge is that there's no single budgeting approach that's right for everyone.
So we're outlining some of the different types of budgeting and how to choose the one you'll actually stick with.
From budgeting for you and your family, managing debt and financial planning, a Scotiabank Advisor can support you with managing your finances in Canada.
Zero-based budgeting:
Assign every dollar of your income to a specific purpose until your leftover is $0. This doesn’t mean that you spend all your money, but that the number of dollars that you don’t assign each month is $0.
Zero-based budgeting can be helpful if you want tight control of spending, or if you’re working towards a specific goal but can be time intensive to use and may be tricky to manage if you have irregular income.
Percentage-based budgets:
Split your after-tax income into broad buckets. The 50/30/20 framework (50% towards needs, 30% towards wants, and 20% towards savings and debt repayment) is common, but you can adjust the percentages to suit your needs.
Percentage-based budgets tend to be quite flexible and quick to maintain but can be frustrating to follow if your ‘needs’ regularly exceed 50-60%. It may also not be precise enough to address overspending in certain areas, or for working towards specific goals like debt payoff or saving for large purchases.
The envelope system:
Allocate money into ‘envelopes’ across set categories, like groceries, rent and entertainment. This can be literal cash stored in envelopes or a digital equivalent.
The envelope system can be helpful for those who want to stop overspending on certain categories and can make the trade-offs of overspending more obvious. However, it can feel inconvenient as it requires regular tracking and can also be challenging to account for irregular expenses.
Reverse budgeting:
Start with the monthly goal and then spending whatever is left without heavy category rules. This might look like first paying $1,500 towards debt or saving it for an emergency fund, then spending the rest of your income that month flexibly.
Reverse budgeting can offer a good balance between structured saving and freedom, since it doesn’t take much time to set up or manage. However, some people who try this method find that “whatever remains” disappears too quickly.
5 quick tips for budgeting successfully:
Be realistic and honest when tracking income and expenses. Budgets work best when the numbers are accurate.
Clear and realistic money goals or a vision for your future can help you make decisions when it comes to short-term spending.
If one method didn't work, that doesn't mean you're a bad budgeter. Try a different approach!
Even low-maintenance budgets need occasional check-ins. Adjust where needed.
Seek help with budgeting if you need to.
Scotiabank offers its customers a range of tools that can help with budgeting, including Scotia Smart Money1 and the Scotiabank Money Finder Calculator. If you’re not a Scotiabank customer yet, getting started is easy. You can open an account online to access these tools and support your budgeting goals.
Plus, Scotiabank advisors can support you with budgeting to make the most of your money.
Warm wishes,
The Moving2Canada team, in partnership with Scotiabank
Legal Disclaimer
This email is provided for information purposes only. It is not to be relied upon as investment advice or guarantees about the future, nor should it be considered a recommendation to buy or sell. Information contained in this article, including information relating to interest rates, market conditions, tax rules, and other investment factors are subject to change without notice and The Bank of Nova Scotia is not responsible to update this information. All third party sources are believed to be accurate and reliable as of the date of publication and The Bank of Nova Scotia does not guarantee its accuracy or reliability. Readers should consult their own professional advisor for specific investment and/or tax advice tailored to their needs to ensure that individual circumstances are considered properly and action is taken based on the latest available information.
1To access Scotia Smart Money by Advice+, you must have an active personal banking retail product, have transacted at least once on your account within the preceding 6 months and have logged into the Scotia Mobile Banking App.
