Manage monthly expenses in Canada: Jose Alex Kailath


Managing money can be a source of stress for international students, but a proper plan or a budget can help one control their expenses to a certain extent. However, many students don’t have or bother to create a budget, leading to avoidable costs and debt.

Creating a budget is the 1st step that one should take to manage their monthly expense efficiently. The 50/30/20 rule is an effective method to manage your expense by dividing them into three different categories. This method was made famous by bankruptcy experts Senator Elizabeth Warren and Amelia Warren Tyagi. (Hammer, 2020)

  • Your needs should account for 50% of your income. This includes housing, food, transportation, childcare, and so on.(Hammer, 2020)
  • Travel, restaurants, entertainment, and luxury products should account for 30% of your income.(Hammer, 2020)
  • Your financial objectives should receive 20% of your income. Debt reduction, cash savings, and investment are all examples of this.(Hammer, 2020)

How to budget?

Budgeting based on the 50/30/20 rule can be sketched in 4 easy steps.

  1. The first step is to find out the gross income that one person receives, i.e., the income after tax which can be found in the paystub.
  2. Step 2 is limiting the expenses so our needs will be in the 50% bracket of our total income. Some of the examples are as follows. There are lot of ways to save money especially as student you can read more about it in saving-money-international-students
  • Rent and utility bills
  • Food and supplies
  • Cellphone bills
  • Minimum credit card bill
  1. Step 3 is allocating the 30% for the wants spending. This includes all the luxuries that one could avoid without affecting the quality of life; examples are as follows
  • Restaurants and take out meals
  • Spa and Saloon appointments
  • Expensive gadgets and toys
  • Travel and vacations

One should be highly aware of what they are putting in their need and want category as it   can be pretty confusing to individuals

  1. Step 4 is where we allocate the remaining 20% for emergency funds, investments, and debt reduction. Moreover, as we have included the minimum debt payment in need, we should proactively start our savings and have at least 3-6 months of expenses covered. If we have any debts like student loans or car loans, we should focus on 20% more to reduce the debt. At the same time, we should look into the investment opportunities either by investing in a low-risk investment (gold or government bonds) or by creating a diversified portfolio of equities, index funds, gold, government bonds, and cryptocurrency.

Where to?

Wealthsimple is one of the easiest platform for beginners who doesn’t have much knowledge about investing.

Author : Jose Alex Kailath

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