TD’s Tips for Creating a Budget

At TD Bank, we believe we have a responsibility to give back to the communities we serve. We’re proud to fulfill that responsibility by partnering with community organizations, like The Beacon Council Economic Development Foundation and, through support from the TD Charitable Foundation, its Miami Community Ventures program, which helps connect residents in our community who might have faced barriers to employment with living wage jobs.  

The pandemic brought big changes and created a lot of uncertainty for many, which is why the work MCV does to help people find living wage jobs and steady income is more important than ever. TD strives to be the better bank and one way we do that is by helping equip people with the knowledge and skills to live their lives with greater financial confidence. 

Here are a few tips you can use to create a budget, customized to your goals, and empower yourself to live with greater financial confidence. 

1. Understand Your Income: List all of your sources of income, starting with your job(s) and adding things like tax refunds, birthday and holiday gifts, etc. It is however important to not rely on money you receive occasionally, such as your tax refund or gifts, as monthly income. Instead, think of this money as extra income or an emergency fund, not your primary source for covering expenses.
2. Track Expenses: Don’t just “track” expenses. Record every expense in your budget ASAP and organize them by category (e.g., transportation, groceries, cell phone, etc.) and divide these expenses into two categories: fixed (e.g., utilities, rent) and variable (e.g., dining out, clothes). This division helps identify the expenses you can adjust to meet your goals. 
3. Did You Save Or Overspend: Subtract total expenses from total income – how much money did you save or owe at the end of the month?
4. Evaluate Your Financial Situation: If you saved, put away this money in savings for your big savings items or use to pay down debt or loans. If you owe, look back at your variable expenses and cut back where you can. Put a separate line next to your actual expenses, called “Monthly Budget Goal” and list the amounts you should spend to allow you to save or at least break-even next month. Finally, put a line “Difference” and see how closely you meet your budget plan. Live within your means and plan how you should adjust your expenses to fit within your income to avoid financial problems.
5. Review Your Budget Regularly: Your budget won’t be useful if you do not review it each month to see if you met the goals you set for yourself. Your budget is your action plan for reaching your goals and as with every plan, it needs to be continuously improved and revised.

Tip: A basic guideline of how much your expenses should be is the “60% Solution.” About 60% of your committed expenses should not exceed 60% of your gross income (income before taxes and insurance premiums). The remaining 40% should be divided into different categories of savings: retirement, long-term savings, short-term savings, and “fun money” (money you can spend on anything you want as long as it doesn’t exceed 10% of your gross income). 

If you would like to see more tips and tricks to help you build financial confidence, check out TD’s free financial resources and tools, including Finance 101, TD Bank Learning Center and our WOW! Zone.