Step 1: Start with what you take home
Your salary isn’t what you can spend. Before your pay reaches your account, your employer takes off federal and provincial income tax, CPP and EI (in Quebec, QPP, EI and QPIP), and often pension contributions, group benefits or union dues. The income tax calculator works out your take-home pay for your province.
Then add anything else that comes in regularly: Canada Child Benefit payments on the 20th of the month, the quarterly Canada Groceries and Essentials Benefit (formerly the GST/HST credit), provincial benefits, or support payments. These are tax-free, so count them in full. See benefits and tax credits to check you’re getting yours.
Step 2: See where your money goes
Look back at two or three months of bank and credit card statements. Most Canadian banking apps sort spending into categories for you. Don’t judge it yet: just find out what you really spend on rent or your mortgage, groceries, hydro and heat, your phone and internet, transportation, subscriptions and eating out.
Step 3: Split it 50/30/20
| Share | For | Examples |
|---|---|---|
| 50% | Needs: what you must pay | Rent or mortgage, groceries, utilities, insurance, transit or car costs, child care, minimum debt payments |
| 30% | Wants: what makes life enjoyable | Eating out, streaming, travel, hobbies |
| 20% | Saving and paying off debt faster | Emergency fund, TFSA, RRSP, FHSA, RESP, extra card payments |
| Part | Amount |
|---|---|
| Needs (50%) | $1,972.49 |
| Wants (30%) | $1,183.49 |
| Saving and extra debt payments (20%) | $789.00 |
| Take-home pay a month | $3,944.98 |
Benefits paid to you, such as the Canada Child Benefit, add to what you have to split. RRSP or pension contributions taken from your pay count towards the 20%.
On a $60,000 salary in Ontario, take-home pay is about $3,945 a month. That’s about $1,970 for needs, $1,180 for wants and $790 for saving.
Step 4: Plan for the bills that don’t come monthly
Many budgets fail on costs that come once or twice a year: car insurance renewals, property tax if you don’t pay it monthly, winter tires, back-to-school, gifts in December and annual subscriptions. Add them up for the year, divide by 12, and move that amount into a separate savings account each month, so the money’s there when the bill arrives.
If you’re paid every two weeks, you get 26 paycheques a year, so two months have three. Budget monthly bills on two paycheques and use the extra ones for savings or these yearly costs.
If the numbers don’t fit
In Toronto, Vancouver and other big cities, rent alone can take half your pay. Treat 50/30/20 as a guide, not a test:
- Cut wants first. They’re the easiest to change, and subscriptions add up.
- Housing is the biggest lever. A roommate or a cheaper place does more than skipping coffee.
- Save something, even 5%. The habit matters more than the amount at first.
Make it automatic
- Set an automatic transfer to savings, or your TFSA, for the day after payday.
- Put fixed bills on pre-authorized debits so you never pay late, and keep a small buffer in chequing to avoid NSF fees.
- Give yourself a set amount for spending, and check in once a month.
The Financial Consumer Agency of Canada has a free budget planner too. Try your own numbers in our budget calculator, which shows the 50/30/20 split next to what you really spend.