We often think of budgeting as restricting and oftentimes consuming. But budgeting can be made very simple, and the best time to start good budgeting habits is college. By following the few steps below you will be on your way toward building a solid foundation for financial success.
Since budgeting is all about making a plan on how to spend your income, you first need to know your monthly income amount. Income can include your paycheck, financial aid, and family contributions.
Needs are required expenses like bills for essentials, the items that you “must have” each month (Remember, you should always budget for your needs first and save for your wants after.)
Wants are something you would like to purchase after you have paid for your needs. They are a comfort or luxury item.
Go back to previous months and look at what you spent money on. You should ask yourself the following questions:
You decide how to spend your income. Try using an income guide to determine your spending goals. The 50x30x20 is common: 50% of income goes towards needs, 30% towards wants, and 20% towards savings.
Based on your status as a student, your income goals might be different while attending school. Yours may look like 80% towards needs, 20% towards wants, and 0% towards savings. When you graduate, however, it’s important to keep track of where your monthly income is going.
Try creating short term spending and savings goals:
Once you know your income, needs vs. wants, and your spending trends, you can start to make changes to monitor your future spending. The Money Management website has a Monthly Budget Sheet and a starter Budget Excel Template you can use to get started.
If you need help creating a spending plan that works with your student budget schedule, request an appointment, and we would be happy to help!