If you live in CanadaвЂ™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 вЂњFoodвЂќ or вЂњHousingвЂќ categories in order to afford your higher living costs. Spending more in one category may mean that youвЂ™ll have to cut back in another category to make your budget balance. Life is all about choices, but you canвЂ™t choose the maximum amount in all spending categories.

These guidelines are only recommended ranges. You may also notice that if you spend the maximum amount in every category, youвЂ™ll exceed 100% of your income. ItвЂ™s important to know there is nothing wrong with exceeding this limit as long as your budget balances (your expenses donвЂ™t exceed your income). 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 arenвЂ™t cheap, youвЂ™ll quickly exceed the suggested maximum for this category. The guidelines suggest you spend 5 вЂ“ 10% of your income in this category. This way, the money is accounted for in the budget, but you donвЂ™t have to record every single cash purchase. When you take money out of the bank, youвЂ™ll record it as spending to the cash category. Create a category for cash spending, and budget to it.

The category in these guidelines that people will most commonly exceed is the вЂњPersonal & DiscretionaryвЂќ expense category. For most people, a cash category is the simplest approach. DonвЂ™t rely on credit for these unexpected expenses. In this situation, you can expect to average just 25 a day in Mexico. Lets say you travel overland using public transport, stay primarily in hostels, eat Mexican street food for three meals a day, and take a tour every couple of weeks or so.

YouвЂ™re allocating some money towards savings (savings are absolutely necessary for lifeвЂ™s many unexpected expenses. If youre a budget traveler, youre going to be pleasantly surprised by how low your expenses are.

YouвЂ™re not spending more than you earn, and.

If finances arenвЂ™t strained in your household, you can choose to be more relaxed and go beyond the guidelines in areas as long as youвЂ™re careful to do two things: These guidelines have been created for someone who really needs to put together a tight budget.

How much is you need a budget