Everyone needs it but few people know how to do it.
Financial planning is important, especially for students. Whether you return to school on a full or part-time basis, managing your all-important cash flow can make a world of difference to your well-being. And the truth of good money management is surprisingly simple. In essence, it’s all about ‘the budget’.
In an age of quick and easy credit, people forget that once-upon-a-time, yes, back in the dark ages before the internet, living within a budget was actually considered common-sense. If you earned $1000 dollars a month and your expenses came to $1200, well, you are over-budget.
As Dr. Phil might say: “How is that working for you?”
Budgets allow you to manage your money. A monthly budget can help you decide how to spend your money, plan for your future, pay off existing debt, and save a few dollars each month by reducing wasteful and impulsive purchases.
There are a number of great money management tools on-line. One of these, https://www.mint.com/ is worth checking out. Mint pulls all your financial accounts into one place. Set a budget, track your goals and do more with your money, for free!
To create your monthly budget, follow the simple steps below:
- Make a list of your expenses. Start with the largest expenses such as rent or mortgage. Make sure to include essentials such as utilities and food.
- From your list of expenses, develop two separate lists, one for essentials and the other for extras.
- You will have a fixed budget every month. These are your basic living expenses.
- A really useful habit is to estimate what you think you will spend each week and then compare it with your actual spending. This gives you your reality check-up. Put a star next to these “impulse” items so you can identify them, and say “NO”.
- Add up your essentials list and the extras list separately. By keeping the lists separate, you can make cuts more easily, if you need to. Bring your coffee and water with you from home. You’ll be amazed when you discover $50.00 at the end of the month.
- Subtract the essentials total from your monthly income and, if you have money left over, subtract the extras total from that amount.
- If your extras list takes you into negative numbers, start looking for places to cut back.
Tips to Increase Savings
- Save or invest automatically with a bank or employer retirement plan.
- Deposit your check directly into a savings account.
- Limit yourself to one ATM withdrawal per week.
- Buy yourself a storage bin or get a shoe box to put your ATM or grocery slips in.
- Toss spare change into a jar.
- Each time you resist buying a latte or going to a movie put that money into that jar.
- If you notice a difference after a month or two, know it’s okay to treat yourself from your ‘money jar’.