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We’ve all been there. We create a budget that includes all of our monthly expenses, allocate a portion for a vacation or other savings goal, and include a certain amount for our longer-term savings needs.

And then reality sets in. Our after-tax income barely covers our monthly expenses and there’s hardly any money left for the pleasures in life. There are, however, a few simple actions that can go a long way towards balancing the lifestyle we want with our need to save for a comfortable future.

It’s only natural to want to create a tight budget so that we feel we are getting ahead each month. But a budget is only worthwhile if it’s realistic. We would all include our ongoing monthly expenses in a budget, but what about occasional costs that can impact our ability to stay on track? For example, you may not budget for a car repair because that’s hopefully not going to happen every month. But the minute your car needs an expensive repair, your budget might not be able to handle it. That’s why, if you own a car, you need to include items such as gas, insurance, repairs and parking in your budget. This applies to all of your known and potential, foreseeable expenses.

Now that you have a realistic budget based on your historical monthly expenses, if you have any money left over, great! You can move on to step #3.

If you don’t have any money left over or if you’re going into debt each month, start looking for areas to trim your expenses. Often the easiest place to start is with discretionary spending. Maybe consider less expensive options for nights out, vacations, vehicles, etc. Compare different mobile phone and internet providers to see if you can cut those costs.

Any additional money you have can be put towards saving. And it’s a good idea to seek professional advice on the types of short- and/or long-term savings strategies that are right for you. Of course, if you haven’t got money set aside for the potential expenses that we talked about in Step 1, you can always put some of your regular savings toward an emergency fund, too.

It’s often difficult to find a large sum of money to put towards your savings. That’s why saving with smaller amounts every month (or even bi-weekly) can be a good approach.

Once you have an idea of how much you can save each month, consider creating a pre-authorized savings plan where you save smaller amounts on a regular basis.

Putting it all together in a meaningful way allows you to stay on track once you set the plan. For example, think about dividing up your take-home pay and allocating a percentage of a dollar earned towards each budget category.

Again, consider something realistic – 60% of each dollar going to living expenses and debt repayment, 15% to a savings and emergency fund, 10% to retirement savings, and 15% to discretionary spending. Once you find the right balance, your budget can evolve accordingly.

It’s important to note that everyone’s life and financial situation is different, so you’ll want to create a sound and reasonable saving strategy that meets your needs.

For more tips on how to keep your life and savings in balance, talk to your financial advisor.


Last reviewed: January 1, 2023

This information has been provided by RBC Global Asset Management Inc. (RBC GAM) and is for informational purposes only. It is not intended to provide legal, accounting, tax, investment, financial or other advice and such information should not be relied upon for providing such advice.