Establishing and sticking to a budget requires motivation and discipline. The easiest way to stick to your budget is to keep it realistic. Always over-estimate your expenses to give you a bit of a cushion.

Now, first you need to set your goals. Organize them in order of the most important and put a date next to them of how much money you will need to have saved for that item/bill. Then figure out when you would like to have each one paid off and put the date next to it. Remember to be realistic!

After you’ve done that, you must find out how much money you have to work with. What is your monthly income?

Finally, add up your expenses. Make a list of every single bill you pay each month including rent/mortgage, hydro, cable, etc. At the bottom of your list you should put your variable expenses. This includes groceries (including toiletries), clothing, gifts, entertainment and the like. Hopefully your monthly bills don’t exceed your income. If they do, it’s time to start trimming your variable expenses!

Also, you must have an emergency category on your list. Even setting aside just $100 a month will net you $1200 a year and if an emergency happens (vet visit, car trouble, etc.) you will be covered (depending on how much you have in this account!). Ideally, you should have 3-6 months worth of living expenses on hand in case you and/or your spouse are suddently out of work.

Another account you should have is a savings account. This account should be used for savings towards the things on your GOALS list. New house, new car, a baby, furniture for your home, vacation.. all of those things. If there’s not enough money in your savings account, you can’t buy that item. It’s as simple as that!

Don’t forget to start planning for your retirement. You are never too young or too old to start saving. A good way to do this is to open an RRSP (Registered Retirement Savings Plans) and start putting some money away. Set aside as much as you can afford per month. Any money contributed to an RRSP remains tax-deferred until the funds are withdrawn.

Now that you have your budget written down (or typed up, like me) STICK TO IT! You also need to write down every single thing you buy for a month, including that coffee on your way to work in the morning. This way, at the end of the first month when you go over everything, you can see what you spend your money on. This helps you to cut back on things much easier than just guessing what you spend on certain items.

Good luck!