A Year of Financial Wellness: A Month-by-Month Guide
Welcome to the second month of your journey through our financial wellness series for 2025! Now that you took the time last month to assess your current financial situation, you’re ready to take the next step: creating a budget. Remember, the idea of a budget is to make better use of your money, not reduce your enjoyment of life!
Month 2: Create Your Budget (In 5 Easy Steps)
Goal: Build a spending plan that aligns with your financial goals.
Financial wellness begins with understanding where you currently stand by taking an honest and thorough look at your financial situation. It can feel overwhelming and
anxiety provoking to uncover the full extent of your debt, lack of savings, or poor credit, but even taking a small step toward understanding your situation is empowering.
Assessing your finances isn’t about judgment—it’s about progress. We’re going to start with small steps this month and you will find that confronting your finances head-on can
bring relief, courage, and clarity, allowing you to take more and more positive steps forward.
Creating and using a budget is the foundation of financial stability. Whether you’re saving for a major purchase, paying off debt, or simply wanting to take control of your spending, a well-planned budget can help you achieve your goals. This month, we’ll guide you through the process of setting realistic goals, finding the right budgeting tools to help you stay on track, and categorizing your expenses.
Step 1 – Set your financial goals.
Before you begin creating your budget, determine your short-term and long-term goals. Short-term goals are those you expect to achieve within six months to five years and may include things like building an emergency fund, paying off a credit card, saving for a wedding or a house down payment, and more. Long-term goals are at least five years out and might include paying off a house, saving for retirement, or opening a business. You must have clear goals in order to effectively structure your budget and spending.
Step 2 – Choose a budgeting tool.
Now that you’ve set your goals, it’s time to find the right tool to track your progress. Finding the tool that works for you means you’re more likely to stick with it.
If you prefer pen and paper, there are printable options online, or you can even start with a blank notebook. If you prefer an electronic tool, Excel or Google Sheets provide a few options within their “templates.” You can also find a template online (just be safe when you’re downloading). There are also many budgeting apps available, some of which will allow you to link to your bank accounts so you don’t have to enter your transactions manually. Money.ca recently published an article detailing the “Best budgeting apps in Canada” in 2025. I personally have used YNAB for a number of years.
At a minimum, the tool you choose should be able to show you how much money is coming in and where it’s going.
Step 3 – Estimate your income.
When estimating your available monthly income only include money you are certain to receive, such as your salary or regular payments. Avoid counting on bonuses, gifts, or other unexpected income until they are actually received.
If you receive a single paycheque each month, managing your budget is straightforward. However, if you’re paid weekly or biweekly, you’ll need to plan how each pay will cover different
expenses. For those paid every two weeks, base your budget on two paycheques per month. During the two months each year when you receive a third paycheque, you can use the extra income to boost your savings, pay off debt, or make a special purchase.
Consider using a common 50/30/20 budgeting rule as a guideline, where 50% goes to needs, 30% to wants, and 20% to savings and debt repayment. Adjust these percentages according to your financial goals.
Step 4 – Categorize your expenses and savings.
Using the information you gathered by tracking your income and expenses last month, organize your expenditures into three buckets:
- Fixed Expenses – set amounts that you are obligated to pay
- Mortgage/rent
- Utilities (heat, electricity, water, cell phone)
- Property taxes
- Insurance (house, car, life)
- Loan and credit card minimum payments
- Variable Expenses – estimated amounts for various household and living expenses
- Food (groceries, dining out)
- Transportation (gas, transit)
- Medical
- Entertainment (streaming, recreation)
- Personal allowance
- Charitable giving
- Additional payments on loans or credit cards
- Savings – amounts set aside for the future
- Emergency fund
- Retirement accounts
All your expenditures should be contained in one of these categories. In addition, you’ll want to think of periodic expenses that you won’t have to pay every month but will inevitably come up at some point.
These are things like clothing, holidays and gifts, automobile repairs, and travel. These are often the expenses that derail a spending plan and add to debt. Estimate a realistic yearly amount for these expenses, then divide by twelve to get an average monthly amount to add to your list of variable expenses.
A common budgeting mistake is to save the amount you have left at the end of the month. This often leads to having nothing left for savings. Since savings are vital to long-term financial security, we suggest you pay yourself first, even setting up automatic transfers to savings accounts each time you get paid.
Step 5 – Review and adjust as needed.
Now is the moment of truth! Subtract your expenses and planned savings from your income to see if your budget balances. People often find that their expenses are more than their income and they are living beyond their means. If this is true for you, review your expenses and identify
areas where you can cut back. This may include dining out less, canceling unused subscriptions, or finding cheaper alternatives for certain purchases. If this feels overwhelming for you, don’t worry, we’ll look at ways to increase your income and cut unnecessary expenses in future months.
Next you need to track your actual income and expenses each month. Commit to a weekly budget review so you can more easily make adjustments to stay on track.
If you have struggled with sticking to a budget in the past or if you feel overwhelmed and don’t know where to start, consider Resolve’s Budget Coaching series. This affordable three-session program will take you through an analysis of your financial situation and create a personalized budget and action plan that will serve as your roadmap to managing your finances with confidence.
Resolve Counselling has accredited financial counsellors and certified money coaches that can help you on your financial wellness journey. Don’t wait, book your 20-minute FREE assessment today to see what program best fits your needs and your budget.
Stephanie Barker
Accredited Financial Counsellor Canada (AFCC) Candidate
