Budget Breakdown for Monthly Costs

Time-tested, general budgeting guidelines for almost any level of income.

  1. Budgeting – Your Money Management Cheat Sheet for Success
  2. How Much Money You Should Spend on Living Expenses - 2021 Budgeting Guidelines for Income

How Much Money You Should Spend on Living Expenses

Budgeting Guidelines for Income

A lot of people wonder how much of their income they should spend on their home, vehicle, groceries, clothes, etc. Below are some guidelines to give you a general idea and provide you with a starting point for your budget. What that will look like exactly depends on your income, family circumstances, and where you live.

Start working with these budgeting guidelines by developing your budget with your net income. This is the money you have left after government deductions from your pay cheque, but before voluntary deductions like RRSPs, pensions, or other savings. If you have expenses like high debt payments, childcare, school expenses, or giving, you’ll need to lower your spending in other areas to allow for these higher expenses.


Budgeting Guidelines
Costs of Living by Category

A pie chart showing budget guidelines per cost of living category.

Breakdown of Cost of Living Budget Categories

  • Housing: 35% 35% 35%
This would include mortgage payments, property taxes, strata fees, rent, homeowner insurance, and hydro or electricity.
  • Utilities: 5% 5% 5%

Examples of utility costs are cell phone, gas, and internet bills.

  • Food: 10-20% 20% 20%

Groceries, personal care products, and things for baby needs are expenses you’d include here.

  • Transportation: 15-20% 20% 20%

Money you spend on public transit, taxis, fuel, vehicle insurance, maintenance, and parking are included in this category.

  • Clothing: 3-5% 5% 5%

Shoes and clothes for all members of the family.

  • Medical: 3% 3% 3%

This includes premiums, specialists, and over-the-counter medication.

  • Personal & Discretionary: 5-10% 10% 10%

Money spent on entertainment, recreation, education, tobacco & alcohol, eating out, gaming, hair cuts, hobbies, and planned charitable giving are some examples. If you spend more in this category, make sure your budget balances by spending less elsewhere.

  • Savings: 5-10% 10% 10%

Plan to save money for expenses that don’t occur every month, as well as for your future. Then you’ll have extra available when you need it.

  • Debt Payments: 5-15% 15% 15%

Many people find that their budget is quite tight when their monthly debt payments are over 20% of their net income.

How to View These Budgeting Guidelines

These guidelines have been created for someone who really needs to put together a tight budget. If finances aren’t strained in your household, you can choose to be more relaxed and go beyond the guidelines in areas as long as you’re careful to do two things:

  1. You’re not spending more than you earn, and
  2. You’re allocating some money towards savings (savings are absolutely necessary for life’s many unexpected expenses. Don’t rely on credit for these unexpected expenses. Rely on money you’ve saved).

The category in these guidelines that people will most commonly exceed is the “Personal & Discretionary” expense category. The guidelines suggest you spend 5 – 10% of your income in this category. However, if you happen to have young children in daycare, have high education costs, take nice vacations, tithe, or have hobbies or recreational interests that aren’t cheap, you’ll quickly exceed the suggested maximum for this category. It’s important to know there is nothing wrong with exceeding this limit as long as your budget balances (your expenses don’t exceed your income).

You may also notice that if you spend the maximum amount in every category, you’ll exceed 100% of your income. These guidelines are only recommended ranges. Life is all about choices, but you can’t choose the maximum amount in all spending categories. Spending more in one category may mean that you’ll have to cut back in another category to make your budget balance. If you live in Canada’s far north or in a city where homes are very expensive, you may have to cut back more than an average Canadian would in the “Food” or “Housing” categories in order to afford your higher living costs.

The Easiest Way to Use the Guidelines

To make budgeting easier, we’ve built these budgeting guidelines into an Excel Budgeting Calculator Spreadsheet provided through our educational website, MyMoneyCoach.ca. It’s free and easy to use – even if you’ve never touched Excel before. If you don’t have Excel on your computer, you can also download it for the Mac or OpenOffice (free open source office software).

As you enter your living expenses, the interactive spreadsheet will calculate all the spending guideline numbers for you. It also visually compares your spending in each category to these guidelines so that you can see how you’re doing. As you fill out the budget spreadsheet with your living expenses, it warns you if you’re going over the guidelines in any area of your budget and shows how your spending falls into these guidelines. It also suggests spending amounts for every budgeting category listed above based on your income and family size. When you’re done, it shows you what your budget looks like in a pie chart divided into the various expense categories.

On top of all this, the budgeting calculator offers you tons of helpful suggestions and tips along the way so that you can avoid the common pitfalls of the budgeting process.

A laptop computer showing Credit Counselling Society's budget calculator spreadsheet.
A person writing their budget in a notebook.

How to Create a Budget With Irregular or Fluctuating Income

If your income fluctuates, creating a budget with irregular income can be challenging. To make things easier, try using one of these 3 strategies for creating a personal budgeting plan for irregular income. These practical strategies will give you simple but effective ways to make sure you’re not spending too much in better months and have enough to spend in leaner months.

If you’d like to learn more about how to plan for and budget with irregular income and even ask questions along the way, you can in one of our free online workshops.

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