Banking
50/30/20 Rule: How to Make a Budget in Canada
A simple way to make a budget in Canada: track your take-home pay and spending, split it with the 50/30/20 rule, and automate savings, with worked examples for three incomes.
How do I make a budget?
Four steps: work out your monthly take-home pay, list your fixed costs (rent, utilities, phone, insurance, loan payments), track a month of variable spending (groceries, transport, eating out), then set a limit for each category and a savings amount.
The free FCAC Budget Planner walks you through these steps and shows where your money goes.
Put it into practiceHow much should your emergency fund be?What is the 50/30/20 budget rule?
A starting point that splits take-home pay into 50% for needs, 30% for wants and 20% for savings and extra debt payments. Adjust the shares to your situation: in high-cost cities, needs often take more than half.
| Monthly take-home pay | Needs (50%) | Wants (30%) | Savings and debt (20%) |
|---|---|---|---|
| Top$3,500 | $1,750 | $1,050 | $700 |
| $4,500 | $2,250 | $1,350 | $900 |
| $6,000 | $3,000 | $1,800 | $1,200 |
What counts as needs and what counts as wants?
Needs are what you must pay to live and work: housing, utilities, groceries, transport, insurance and minimum debt payments. Wants are everything optional: restaurants, streaming, travel and shopping. Savings includes your emergency fund, TFSA or RRSP contributions and payments above the minimum on debt.
How do I stick to a budget?
Automate it: on payday, move your savings to a separate high-interest savings account and set bills on autopay. Review your spending once a month, and give yourself a small amount of unplanned money so one slip doesn’t sink the plan.
Paying with a no-fee credit card you clear in full each month can earn rewards and gives you a monthly statement to review; if you tend to carry a balance, use debit instead.
What should I do first with the money I save?
A common order: build a starter emergency fund, pay off high-interest debt such as credit cards, grow the emergency fund to 3 to 6 months of expenses, then invest for longer-term goals in a TFSA, RRSP or FHSA.
Keep reading
BankingHow Much Should Your Emergency Fund Be in Canada?How big an emergency fund should be (3 to 6 months of expenses), where to keep it, and how much interest it can earn: 2.8% at the best online savings account we track versus 0.48% at the big banks on average.
BankingHow to Waive Chequing Account Fees in CanadaMost of the big-bank chequing accounts we track charge $16.95 to $30.95 a month and waive it if you keep a set balance — $4,000 on the mid-tier plans, $6,000 on the premium ones.- BankingOverdraft Protection Fees: How Overdraft Works in CanadaHow overdraft protection works at Canadian banks, the usual fees (about $5 a month or $5 per use) and interest (around 21% to 22%), and the new rules since March 2026 that cap NSF fees at $10.
DebtHow to Pay for the Holidays Without Credit Card Debt in CanadaSet a holiday budget, spread the cost, and if it ends up on your credit card, what it costs to pay off: $1,500 at 20.99% is interest-free if paid in full, but costs $175.95 over 12 months and $1,802.67 on minimum payments.
Official sources and further reading
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