A budget can mean many things to different people. A budget could mean sacrificing and saving up for a goal. A budget can mean skipping out on those new shoes or packing a lunch from home instead of going to eat out with coworkers.
For me, a budget means having a limit for how much I can spend and respecting that limit. Establishing a budget is a way to keep myself out of trouble and look at the bigger long-term goal which is my financial success. Everyone should have some type of budget in place.
When you’re just starting out and getting the hang of this whole ‘personal finances’ ordeal, it’s going to be difficult to establish a budget because you probably have no clue how much you’re spending and where you can cut corners each month. To start planning a budget, you need to do a few things first.
Commit to the cause
First things first. You need to commit to your own cause. Because if you don’t, you’re bound to slip up. If you’re going to start budgeting, do it wholeheartedly. College students should plan out and commit to a semester budget as oppose to a 30-day budget. To stay organized, you can download budget worksheets online or create a spreadsheet document on your computer. Regardless of what you use to get organized stick to it and follow through with your main goal.
Keep receipts
It’s important to keep all receipts of purchases you make for at least 30 days when starting out. This is an important part of the process because when you look back at your spending sometimes you’ll be shocked at what you spent and why. This will help you become more conscious of your spending.
Track your spending online
In addition to keeping track of all those receipts, you’ll also need to keep track of your online spending. This can include bills that are paid online, online shopping, and even credit- and debit-card transactions. The goal is to get a clear picture of all of your spending, so it’s important to include every single transaction you make during the entire 30 days.
Tally everything up
Once you’ve gathered your receipts and bank statements you can begin to decide your monthly expenses and in relation to your income. This is the perfect time to get organized and file all your bills and expenses properly. Tally up everything from gas, rent, bills, insurance, car maintenance, toiletries and even food.
If your expenses outweigh your income you definitely need to work on your budget. And even if they don’t, a budget is still a good idea If you want to have more money left over to save or use at the end of the month.
Cut Expenses Down
The next step is where you can get a little creative. Think about which expenses are a necessity and which ones are just wants. (Hint: If you don’t need it to live safely and be healthy then it’s probably a want).
Maybe you can cut your phone bill down by switching to a prepaid service or reduce your cable service in some way. I call Comcast all the time to negotiate my bill down and receive new promotion prices for being a valued customer. Try turning extra lights off and unplugging appliances at night to cut down on the electric bill.
Maybe you can eat out less and look up easy recipes for some of your favorite meals or cook with friends certain days during the week to cut back on grocery expenses. Try walking, public transportation or ride your bike to get to certain places. And please get a new quote for your car insurance as there is almost always a lower option or see if your current insurance company will give you any credits or reductions for being insured with them for a given amount of time. The possibilities are pretty much endless.
Once you cut down on your expenses and limit what you need to spend you will begin to see your wallet loosen. You can also utilize some online sources to help you keep organized and fully conscious of your budget plan.
mint
Mint.com is a trusted and secure site that automatically all your financial information into one place, so you can finally get the entire picture. The site allows you to see first hand what’s happening with all your accounts – checking, savings, investments, retirement – at any moment of the day. And they also offer a free mobile app that lets you track your money on-the-go.
Did you budget during college? Why or why not?
Chonce is a freelance writer who’s obsessed with frugality and passionate about helping others increase their savings rate, eliminate debt, and work toward financial stability. She chronicles her journey to becoming debt-free on her blog, mydebtepiphany.com.
