Budgeting is the most useful tool you have to manage your finances. Paying for items has never been easier with the invention of tap to pay, and most students grossly overestimate how much they are spending a month.
The first step in creating a budget is to understand how much you spend a month, and what you spend money on. Fill out the first page of this Budget Planner to understand your current spending for one month. Make sure you divide any semester charges by four to account for each month of the semester.
Next, identify your needs and wants. Needs are things that you absolutely should have and wants are things that you would like to have. For example, rent and groceries are needs and dining out and shopping are wants. In a budget, needs are prioritized first and then wants. Go to the second page of the Budget Planner and divide your spending into the needs and wants chart.
A beginner friendly budget is the 50/30/20 rule. 50% of your income goes to your needs: rent/mortgage, transportation, utilities, groceries, etc. 30% of your income goes to your wants: shopping, travel, dining out, gifts, etc. 20% of your income goes to your savings. It is recommended that you try to create a savings fund as soon as you can, even if you’re only putting a little into it each month. Fill out the 50/30/20 chart on the Budget Planner to finish your budget.
Once you have created your budget, it is important to continue tracking your expenses to ensure that you are sticking to your budget. Find a tool that will help you keep track of your expenses, whether it’s a notebook that you write down your expenditures in or an app that helps you track your purchases. You can also use an excel Budget Tracker, such as this one. One tip to help you stay in your budget is to buy gift cards at the start of each month for the different items in your budget. For example, if you budget $50 a month for Starbucks, buy a $50 Starbucks gift card at the start of each month. Only buy Starbucks using that gift card, and once the gift card is out of money then you know you’ve reached your budget limit.
