Budget Your Cowboy Cash
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 aren’t really about limiting your purchasing power; they’re about spending your money wisely. You like to spend, right? Who doesn’t?
Creating a budget, also known as a spending plan, helps you decide where to spend your hard-earned money. By creating categories for your bills, housing, transportation and entertainment, you can more effectively monitor your money and ensure it’s going toward your goals and priorities.
Although your budget primarily focuses on where and what you’re spending, don’t forget about saving! There’s nothing wrong with wanting nice things; just remember that you’ll also want purchasing power down the road. It’s important to set money aside for future goals, like home ownership, transportation, a special vacation, or retirement.
So, what’s the secret to a workable budget? Here are a few tips to get your spending plan in tip-top shape.
Begin by tracking your spending. Drop your receipts in a jar or box nightly (after balancing your checkbook, of course) for a month. At the end of the month, list the amounts, grouping similar expenses together, and tally those slips. You’ll see some obvious spending patterns emerge.
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 selecting a pre-made budget (linked below). Using the spending categories you just created, add or delete categories in the worksheet as needed to personalize your spending plan. Be sure to include expenses that don’t occur on a monthly basis, like property taxes and insurance; figure the monthly average by dividing the total bill by 12, then add it to your spending plan. Store that money in your savings account until it’s time to pay up. Remember to add a category for paying yourself FIRST. 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 (after taxes are taken out). Assign a portion of your monthly income to each expense category. Try to be as realistic as possible; since you’ve been tracking your spending, you should have a good idea of how much money you need to cover each category.
Finally, subtract your total monthly expenses from your total monthly income. Have money left over? Use it to knock out pesky debt or, if you’re debt-free, dump the extra dough in your savings account. Expenses exceed your income? Check your spending and decide where you can cut back. Then do it.
Stick to your new budget for a couple of months, then evaluate and adjust it as needed. Remember, this is a fluid plan. As priorities shift and goals change, your budget should follow.
Here are some helpful tools for creating and maintaining your spending plan.