HOW TO BUDGET
Learning
how to budget in school will allow you to live debt free sooner so that you
have more money for retirement or spending.
Budgeting
matters because money will enable you to reach your goals in life so look at
budgeting as learning how to use money as a tool to get what you want.
Budgeting
will show you exactly where your money goes so that you can make conscious
decisions to use your “tool” more effectively.
STEP
1
Customize
the budget to YOUR needs and set up CATEGORIES. (Try not to be too trivial with
details.)
Current
spending (i.e. eating out, bills, rent, groceries, daycare, clothes,
transportation, etc.)
Hobbies
(i.e. movies, )
Habits
(i.e. buying coffee everyday)
If
you are in a relationship it is important to you as a couple find a basic
common financial goal that you are both motivated to work towards. If you cannot agree then it will be a cause
of ongoing conflict that will doom the budget to failure. Sit down and discuss realistic goals to
achieve a compromise.
STEP
2
Establish
budget categories and collect all your bills and receipts from the past couple
months if possible.
Calculate
how much income you have from grants, scholarships, loans, and/or work.
STEP
3
Record
your expenses in a blank worksheet or little notebook as you spend money.
Do
not forget to record cash transactions.
Analyze
your expenditures and allocate a certain amount that is reasonable for each
budget category.
Add
the total expenses and subtract from your total income.
If
your number is negative you are spending too much.
STEP
4
Set
financial goals and make adjustments.
How
much can you reasonable live on?
Do
you really need to eat out as often as you do?
After
a couple weeks you should know your spending style and habits, at which point
you can begin to look for ways to reduce your expenses.
If
you can save money use it to build an emergency fund. Open a savings account in a bank or credit
union that is not as easily accessible to hold the emergency fund.