At the risk of stating the very obvious, the first step to creating a budget is knowing exactly how much paycheck is left over after taxes and retirement plan contributions, as well as necessary monthly expenditures -- groceries, rent, loan payments, etc. But obvious though it may sound, few people actually sit down and map it all out.
It's a helpful exercise, especially in early career stages when there may not be much discretionary income. Though it's far from easy, the main goal of creating and sticking to a budget should be to find ways to save money instead of owing it. This will ensure that compounding works in your favour and not against you. In other words, compounding is great when it comes to investments -- if you start saving in an RRSP early, the earnings on investments will have decades to compound. It's bad news on the other side of the ledger, though: Loan balances can quickly grow out of control when compounding at high interest rates.
Saving for retirement and staying out of debt is a difficult feat for early career workers, but it's not impossible. Take a look at this example.
