Make It Make Sense: How Can I Enjoy Summer While Keeping to My Budget?

Welcome to CB’s personal-finance advice column, Make It Make Sense, where each month experts answer reader questions on complex investment and personal-finance topics and break them down in terms we can all understand. This month, Scheherazade Hasan, a senior advisor at money-management platform Wealthsimple, tackles staying on budget during the summer. Have a question about your finances? Send it to [email protected].

Q: Is there a way to budget that allows me to save while also enjoying my summer?

Spring is here, which means spring cleaning. Between closets crowded with winter coats, an overflowing junk drawer and the storage solution you thought would make everything “simpler,” it’s easy to overlook a key item on your spring-cleaning checklist: your budget.

It may not be the most pressing item on your to-do list, but budgeting is a fundamental part of maintaining your financial wellbeing and building long-term wealth. It’s also the most effective way to ensure you’re bringing in more money than you’re spending, making it harder to slip into debt and easier to progress toward your goals. Unfortunately, the Financial Consumer Agency of Canada found only half of us budget.

The 50/30/20 approach can be one of the best, least-complicated ways to spring-clean a budget, and it works for budgeters at all stages in life. With this strategy, 50 per cent of your income is dedicated to must-haves like housing, food and bills. If half of your take-home pay isn’t enough to cover these items (a position that many Canadians unfortunately face), you’ll need to find ways to cut back on these expenses—if it’s an option, you could consider moving to a less-expensive neighbourhood or selling your car and using public transit—or adjust how much money goes toward these next two categories.

Related: Quiet Luxury is Out. Loud Budgeting is In.

Thirty per cent of your income goes toward “wants,” like travel, dining out or experiences. Being able to splurge a little helps your budget feel sustainable rather than restrictive.

Finally, 20 per cent of your income is reserved for financial goals. This includes paying down debt, building an emergency fund and investing for retirement— ideally in that order.

Once you have your plan set up, make sure you stick to it. Which is a lot easier said than done. Here are a few tips to help.

Automate what you can: Unlike cleaning, budgeting doesn’t have to take up your time. Auto-transfers can be a great tool because they allow you to auto allocate your paycheque to pay down debt and build your savings.

Saving is a luxury: Due to inflation, rate hikes and rising housing costs, 44 per cent of Canadians weren’t able to save from 2022 to 2023. If saving feels too ambitious right now, focus on what’s realistic. Saving any percentage of your paycheque will help build the habit of saving and can still make a difference.

Keep your eyes on the prize: While a budget may feel restrictive, it can also protect you from “lifestyle creep.” (Think: putting the extra money from a promotion toward going out to fancy dinners instead of increasing your savings.) And remember: It’s important to revisit your budget throughout the year. As your income, goals and circumstances change, your budget will need to change as well.

Set aside some time this spring to take stock and refresh your finances, so you can enjoy summer and hit your savings goals.