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We take a look at five common budgeting pitfalls and steps you can take to help build a budget that works for you.
Budgeting for your household
It’s a great feeling when you know you’re in control of your money. It all starts with a budget. Are you saving for a wedding, a car, or just next month’s groceries? When you create a budget, you can track your money better.
Book an appointment with an advisor to help you set up your budget.
Your Guide to Budgeting
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Step 1
What is a budget?In a nutshell, budgeting is about looking at the big picture, deciding where your priorities are, and making a few short-term changes to reach your financial goals.
Some things to keep in mind when budgeting:
- Know your goals and plan for them — What am I saving for?
- Small changes can have a big impact over time — Do I use all these subscription services that are billed monthly?
- Think twice about impulse purchases — Will I still want this tomorrow?
- Take note of essential fixed expenses vs. variable expenses — Do I need it or want it?
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with an optional subtitleScotia advisor Farah El-Masri explains the basics of budgeting
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Step 2
Why is having a budget important?Having a budget is important for a number of reasons:
It helps you live within your means
Living within your means is essential to avoiding unnecessary debt. If you know how much money is coming in, you can plan for how much money is being spent. This makes it easier to avoid any unwanted surprises when it comes time to pay the bills.
It prepares you for emergencies
With a budget, you’ll be able to more easily set aside money for an emergency. A good goal is to have about 3 to 6 months of living expenses saved up.
It helps you accomplish goals
Whether you’re planning on buying a home, going on vacation, or retiring, saving that amount of money takes planning. A budget will help you figure out how much money to set aside now, so you can reach your goals later.
It gives you peace of mind
Not knowing where your money is going can feel overwhelming. Staying on top of your spending can provide a sense of control.
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Step 3
Get started with our Money Finder CalculatorThe Money Finder is a free budget calculator designed to help you create a spending plan for your household. It compares your income and expenses and gives you a better sense of how much available money you have to put towards your savings.
It takes just a few minutes to complete, but you’ll start to see how your income and expenses stack up, and how much you might have left over.
Try the Money Finder for yourself and then come back and continue with this guide.
How did you do? If you’re in the positive, congrats! You have money to set aside for savings.
But don’t worry if you’ve overspent. Here are just a few ways you can start to cut expenses:
- Pack a lunch one extra day a week
- Make a list when grocery shopping to avoid impulse purchases
- Use public transportation more often, get a bike, or carpool
- Shut off the lights when you leave a room
- Watch for coupons and specials at your grocery store and when dining out
- Accelerate your mortgage payments with extra payments to the principal
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Step 4
Set up these mobile or online functions to track your spending and incomeThere are many different ways to track your spending. With digital banking, you can access your accounts anytime, anywhere to more conveniently watch your spending. If you haven’t set it up yet, you can use our online setup guide and mobile guide.
Once you’re ready to get started, you can take advantage of our digital budgeting features available to you.
Scotia Smart Money by Advice+
Making a personalized budget? Scotia Smart Money by Advice+ is a day-to-day money management tool on the Scotiabank mobile app that helps you*:
- Track and understand your cashflow and monthly spending
- Set up, manage, and track your budgets
- Access personalized insights and tips on how you can manage your money more effectively
InfoAlerts
InfoAlerts help you stay on top of your transactions and credit cards in real-time. Once activated, you’ll get app notifications and emails about your balances, withdrawals from ABMs, Interac transactions, bill payments, and more. Here’s our step-by-step guide to setting up InfoAlerts.
eStatements
With eStatements, you can view, download, and print up to seven years of statements online. Follow the demo and steps in our eStatements set-up guide to get started.
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Step 5
Start with paying down debtAside from a mortgage, it’s usually a good idea to pay down any debt you may have before setting aside money for savings. A budgeting plan can help you reduce your expenses so you can tackle your debt payments.
These two methods are helpful to know when paying down debt:
The debt avalanche method
This method focuses on paying off the debt with the highest interest rate first. After that’s paid, you shift to the debt with the next highest interest rate and so on. It’s a highly efficient way to pay down debt.
The debt snowball method
Many people find this method easier to stick to. The goal here is to start by paying off your smallest debt first. This can create a sense of accomplishment, so you can use that momentum to move on to the next debt.
You can find more helpful ways to manage your debt.
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Step 6
Set up automatic savingThere are a few resources available to help you save more easily without even having to think about it.
Pre-authorized contributions (PAC)
Once you’ve figured out how much money you can spare per month, you can set up a recurring contribution to your TFSA, RRSP, or other savings account. Even putting away $25 per month can make a big impact in the long run. Here’s a guide to setting up PAC.
The Bank the Rest program
You may not miss your spare change now, but it can add up over time. With Bank the Rest, every transaction made with your Scotiabank debit card will be automatically rounded up to the next multiple of $1 or $5 and transferred to your savings account. You get all your ‘change’ put into your savings without having to lift a finger.
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Step 7
Book an appointmentYour financial plan can start with a simple conversation.
Give us a call at 1-866-698-5927 and book a meeting with one of our advisors.
Common budgeting questions
Budgeting at your fingertips
Your budget is the first step to a solid financial plan. Talk to a Scotia advisor today about preparing a budget that’s tailored for you and your family.
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To 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. If you have any questions about whether any recommended action, insight, or product is right for you, please contact us.