You’ve probably heard people discuss budgeting many times. Do any of these sound familiar?
“I don’t need to budget; I know how much money I have.”
“I don’t have the time!”
“It’s too much work to keep records of everything.”
While all of these have some truth, budgeting is a strong, life-long skill that can help you sort out your finances and focus your spending. Particularly for those in college, it’s a key time to hone your budgeting skills when you may be working less, have additional educational expenses and competing demands on your income.
You can track specifically where your money is being spent.
Keeping track of all the money going out and all the money coming in will help to clearly identify your biggest expenses.
You can discover “hidden” expenses.
You may not realize that stop at the coffee shop every morning is costing you roughly $100 each month, or $1,200 in a year! That’s real money that could be used to pay down debt or other priority expenses.
Budgets help prioritize expenses.
Once you have a good idea of where your money is going each month, it will help you determine what is a priority and where you need to focus you’re spending.
You can prepare for the unexpected.
We all know that we can encounter some unexpected expenses. Maybe it’s car repairs or a broken computer or less hours at work. Knowing where your money is, where you can cut back easily and if you can save money, helps when unexpected expense arise.
Tips to Help You Budget:
- Use envelopes of cash for specific expenses like entertainment or shopping. Once the money’s gone, no more money can be spent.
- Set up automatic bill pay to help eliminate past-due balances and pay priority expenses first.
- Use an online app like Mint.com—which can be connected to your bank account, to track expenses and get notifications about spending limits.
- Use online banking systems to monitoring spending from your phone or computer consistently to keep a pulse on your budget throughout the month.
- Don’t forget to give yourself some reasonable space within your budget for fun or entertainment; it will be much easier if you have a little flexibility or reward!
- If at first you don’t’ succeed, don’t give up! Keep trying until you find what works for you.