Are you left at the end of the week with a purse full of ATM withdrawal receipts and no idea where your money went? Do you get overdraft notices in the mail a few times a year? Do you find yourself calling your parents every few weeks asking for more money?
If this sounds like you, it might be time to start a budget.
Budgeting might not sound like a glamorous or fun activity, but trust me, with your finances under control you will be relaxed, un-worried about debt, and envy of all your friends (and parent’s friends!) Best of all? You’ll learn a seriously valuable life skill. With a budget tailored to your needs, you will be well on your way to smart business decisions – and you will feel oh-so-satisfied when your savings finally add up for that big special purchase!
Step One: Determine your priorities.
What can you not live without? Maybe you want to be able to go off-campus for dinner once a week or have money for going out, or a few cute new outfits once a month. Or maybe you would be willing to sacrifice your weekly trip to Brynn’s for more money to spend at the movies. Regardless of your priorities, it is important to take note of the consequences: spending more in one category means spending less in another.
Step Two: Take control.
First, make a big list of everything you spent money on last month: tuition, rent, groceries, sundry candy, your daily skinny vanilla latte, froyo, new clothes, eating out, alcohol etc. This might seem overwhelming at first but this step is crucial for a successful budget. Then, divide these expenses into broad categories such as “shopping” and “entertainment.” It is also helpful to note which of these purchases are avoidable and which aren’t; this helps you make cuts in the next step. Don’t forget to include any income!
Step Three: Set Limits.
Decide how much money you want to spend in each category. Look at where your money normally goes each month and decide from there. For example, if you have gotten into a bad habit of eating out and spent $100 last month at restaurants, make your goal $50 and stay within that. If you need some help doing this, refer back to your priorities. If you decided at the beginning that shopping is important to you, make sure you budget enough to do that. But remember, that money can’t be spent on something else too! You have to set yourself up for success. If you aren’t realistic, you will fail and be frustrated. Make sure your budget lines up with your priorities and you will be good to go!
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A few more tips:
If your reason for budgeting is to save money, decide how much money you want to set aside each month into a savings account. Pretend your money in savings doesn’t exist; otherwise you will be tempted to spend it!
To decide if your budgets are reasonable, add up all of your budget limits and subtract them from your monthly income. You want to have some wiggle room for things that aren’t budgeted and some money for emergencies. Decide for yourself if you are comfortable with what is leftover each month.
Step Four: Find a system that works for you.
There are a few ways to track your spending and income. You can withdraw cash from the bank and divide it into categories (that way you can’t go over your limit!) You can also use a service online like Mint.com. Budgeting websites link up with your bank information and track your spending for you. You can also save receipts and tally everything up in an excel spreadsheet.
Step Five: Stick with it!
No matter which method you choose to watch your money, you made your budgets considering your priorities, so sticking with it should be a breeze! And when life throws you tempting ways to blow your cash, just stick to your system and avoid those last minute purchases or impulse buys. You’ll have to make some sacrifices, but at the end of the day, this gives you a huge advantage over your peers. Plus, you’ll have peace of mind knowing your savings account is growing.
Some ways to compromise:
If your friend wants to go off campus for dinner but suggests a budget-breaking restaurant, suggest a cheaper alternative. There is a good chance that another friend would prefer the other option too! If you have a serious coffee addiction, don’t cut your Starbucks pick-me-up out entirely, but try to cut back a little. If you love to have your nails painted, maybe quit the spa manicures and do them yourself at home. If you love date night with your boyfriend, cook for him instead! If you get a Cook-Out craving every weekend at around 2 a.m., get your friends to help you stay away – your budget and waistline will thank you.
Easy, right? All it takes is some organization and self-restraint to be on your way to financial success. So get budgeting, collegiettes!