• Adam Stapley

How to Build a Budget and Save Money

Updated: Aug 23, 2021

If you’re planning towards a major financial purchase such as buying a home or a new car, or if you’re starting to think about retirement, planning your monthly savings is essential. Canadians frequently wonder how to save money when planning for their financial goals. This article will teach you the basics of budgeting and how to make a budget that will guide you towards your financial goals.

What is a Budget?

A budget is a way to organize your monthly finances to keep you on track to achieving your financial goals. A budget tracks your income and expenses, showing you how much money you are saving each month. This will also help you identify where you are spending your money the most.

Why is a Budget Important?

A budget is important to keep you on track towards your financial goals. Just with any goal in life, if you don’t create a plan and track your progress, you won’t reach your destination. A budget is key to organizing your personal finances and can make or break your financial success.

If you’re wondering how to save money, a budget will be the most effective tool to plan out your savings. Combine your budget with a save-first mentality and you can make savings a part of your monthly routine.

How to Make a Budget

Before you start building your own personal budget, download a copy of our free budget planner here. Next, gather your last three pay stubs and the past three months of receipts (if available - if not, add this to your new financial habits. Keeping track of receipts makes tracking all of your monthly expenses easier).

Once you’re ready to begin, follow these steps:

Step One: After-Tax Income

Using your three most recent pay stubs, calculate your average net income. Net income is the amount deposited into your account after taxes have been deducted. Next you need to annualize your net income.

If you’re paid bi-weekly, multiply your net income by 26; if you’re paid weekly, multiply net income by 52; if you’re paid semi-monthly multiply net income by 24; and if you’re paid monthly income is multiplied by 12.

Now take the annualized income and input it into your budget organizer. See screenshot below.

Step Two: Expenses

If you don’t already, you should begin keeping track of your receipts. There are many apps that can help you track your expenses, but I’ve always found that sticking receipts into an envelope each month and storing those envelopes in a shoe box is the simplest way to keep track of my monthly expenses.

If you don’t use cash very often, another way to analyze your previous monthly expenses is to gather your bank account statements and credit card statements. Separate your expenses into categories. These will be things like living expenses, transportation, health and beauty etc… Use the budget planner and add and remove categories as necessary to reflect your personal financial situation.

For each regular expense, use the past three months and take an average of the monthly cost. Input the cost into the appropriate row on the budget planner. For expenses that don’t occur regularly, like that one time you went to play paintball, add all of those expenses up and use them to create an annualized cost and divide by 12. This cost will become “Other Expenditures”.

Input all of your monthly expenses into the budget organizer. Seek screenshot below.

Step Three: Savings

Once you’ve input the annual income for all contributing members of your household and input all of the monthly household costs, what is left are your savings. If this number is negative, it means you are spending more than you earn, and that is a problem.

Spending more than you earn means you’ll soon run out of savings and will start relying on credit to pay for basic necessities. Using credit cards and other loans to cover shortfalls in your budget increases your monthly expenses as you will be required to pay interest on the money you borrow. Avoid having outstanding balances on credit cards and relying on credit to cover shortfalls in your expenses at all costs!

Hopefully after you’ve calculated your income and expenses, you’re left with a surplus. These funds can be invested towards your financial goals, whether you are saving for down payment of planning for retirement. We’ll cover ways you can increase your savings in the section below.

How to Increase Savings

This section of the article deals with ways to increase your savings. We’ve assumed that you have a monthly surplus which can be saved and invested. If you have outstanding debts or you have a shortfall in your savings, check out this article on how to get out of debt faster.

Increase Income

One of the most obvious ways to increase your savings is through increasing your income. You can increase your income a variety of ways. If you’ve been in the same position for a couple of years, maybe it’s time for a raise or promotion. Here are some tips on how to ask for a raise.

Is the Boss not ready to promote you? Maybe it’s time to brush off that resume and search for something more appropriate. Indeed.com recently posted a great blog article on how to write a resume.

Although increasing your income is an obvious way to increase savings, there are two reasons this is not the most effective way to do so.

First off, for every dollar you increase your income, you will pay additional tax, meaning you will not earn a whole dollar. When you save a dollar, there is no taxation on the savings. Because of the tax on the extra dollar, you’ll increase savings faster by decreasing your expenses.

Secondly, it is harder to increase your income without training, experience and availability. Sure, you can take on a second job, start a side gig or participate in a referral program, such as Moka’s Give $5 and Get $5 Refer a Friend program, but it is simply easier to decrease expenses than to increase income.


The fastest way to increase savings is to eliminate unnecessary expenses. This prospect is much easier than it sounds. Canadians pay for services which they don’t use every day of the week. What is worse, is that we often pay for services when there are free alternatives which are just as good as the paid service. Check out this article to learn how to save $130 with one simple trick.

Regularly review your phone plan to see if you’re using all of the data you have on your current plan. Most of us don’t realize we are using too much data and paying data charges, or worse, paying for way more data than we need.

Once you’ve reviewed your monthly bills and identified expenses you can eliminate, it’s time to start looking at ways to reduce other monthly costs.


Reducing your expenses starts with reviewing your budget. Determine which items you spend too much money on or can find ways to reduce. Common items include saving gas by carpooling, cutting down (or quitting altogether) smoking, drinking or other recreational substances. Once you’ve looked at what you can reduce, you’ll start to look at other areas which may be hard to reduce. Now it’s time to look at what you can substitute.


Substituting expenses involves looking for cheaper alternatives. One of the most common expense items which you can start substituting is your grocery bill. Many grocery stores such as Loblaws, charge a premium for items that appear to be of better quality than their alternatives. Much of this effort to increase the price on common items is achieved by fancier packaging and display cases. The truth is that cheaper alternatives such as FreshCo and No Frills often offer some of the same products at a lower cost.

Here are some other common alternatives to familiar expenses:

  • Gyms - try 24-hour budget fitness centres and go at off-peak hours

  • Cable - ditch the cord and get an IPTV. Get the same number of channels for a fraction of the cost

  • Cash-back - shop for items that you normally buy with cashback apps. Moka has a cashback feature which can help you save hundreds of dollars


When I’m asked how to save money for down payment, my answer is always the same. Automate your savings. What I mean by automating your savings is to make it something you do without thinking about.

I want you to go back to that budget planner and make one change. Add savings as an expense item. A good rule of thumb is to save at least 20% of your income each month. When you add this into your budget as an expense, it helps you shape the rest of your monthly spending to accommodate your savings plan.

Now that you’ve determined how much you wish to save, use your online banking to set a transfer from the account where you receive your paycheque into your savings account. Creating a regular automated transfer ensures that your savings will grow over time without having to think about it each month.

Do you want to accelerate your savings? Moka has an amazing feature that rounds up each transaction in your chequing account and deposits the change into an investment account that is managed for you. They offer easy investing for everyone regardless of your financial knowledge of investments. Find out why Moka is one of the best investment apps in our recent blog article.

Download our Free Budget Planner

Don’t forget to download our free budget planner today! Use this guide along with our free budget planner to help organize your monthly expenses. Increase your savings and reach your long-term financial goals with this easy to use organizer.

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