Budget Your Buck$
Budgets…blah! Is that what you’re thinking? If you’re like most college students, you may think you need lots of money to benefit from a budget. Or, you may view budgets as restrictive and boring. Budgets are NOT about limiting your spending; they’re about spending your money wisely.
Creating a budget, also known as a spending plan, helps you decide where to spend your hard-earned money. By creating categories for your expenses, you can better keep track of your money and ensure it’s going toward your goals and priorities.
Although your budget mainly focuses on where and what you spend, don’t forget about saving! There’s nothing wrong with wanting nice things; just remember to pay yourself first, i.e. save!. It’s important to set money aside for future goals, like buying a house or car, taking a special vacation, or retiring.
-- Here are a few tips to help you create a realistic spending plan:
Start by tracking your spending. For a month, collect the receipts for every dollar you spend. At the end of the month, group similar expenses together, and add up the amounts. You’ll be able to see some obvious spending patterns.
Next, use the groups from your list to create categories for your purchases. Basic categories could include savings, rent, utilities, transportation (car payment, fuel, insurance, maintenance), school (tuition, books, supplies) and entertainment (movies, cable, concert tickets). Don’t stop there; categorize your health and medical expenses (gym membership, insurance, co-pays), communication expenses (cell phone bill, Internet) and personal care expenses (haircuts, make-up)—anything you spend money on.
Then, make it easier by using a pre-made budget form (linked below). Using the spending categories you just created, add or delete categories in the worksheet to personalize your spending plan. Be sure to include expenses that don’t occur on a monthly basis, like property taxes and insurance. To figure the monthly average, divide the total bill by 12, then add that amount to your spending plan. Store that money in your savings account until it’s time to pay the bill. Remember to add a category for savings! Saving should be part of your monthly budget, not something you do if money is left over.
Next, use current pay stubs to calculate your average monthly income. Assign a portion of your paycheck to each expense category. Try to be as realistic as possible. Since you’ve been tracking your spending, you should have a good idea how much money you need to cover each category.
Finally, subtract your total monthly expenses from your total monthly income. If you have money left over, use it to knock out debt or, if you’re debt-free, put it in your savings account. Are your expenses higher than your income? Check your spending and decide where you can cut back.
Stick to your new budget for a couple of months, then look it over and change it if needed. Remember, as your goals change, your budget should change too.