Have you recently asked yourself, “where did all my money go, I just got paid?” Or maybe you received a cash gift and felt overwhelmed with how to spend it. These are all normal feelings and questions. Learning how to build and stick to a budget is a skill that everyone should learn.
Steps to building a budget:
1. Determine your goals
Before getting into the weeds, you should always establish a goal or something you are trying to achieve. Make sure you write them down in your phone, on your computer, or on paper! Potential goals could include saving $1,000 before you graduate, getting a car to travel to and from school, or finding an affordable apartment. These are all great goals, and budgeting is an important piece of accomplishing them.
2. Figure out your income and expenses
In every budget, you will need to know what your income is – whether it’s your financial aid refund, a job, or allowance. Your income may change monthly or it may be consistent over time. You will also need to know what your expenses are – what are you paying for? Potential expenses include rent, utilities, food, transportation, and insurance. Some of your expenses may be one-time, monthly, or quarterly. Anything that will reduce your income should be added to your budget.
3. Figure out where you stand
Is my spending more than my income? Or do I have some money at the end? The simple way to answer this question is to subtract your expenses from your income. If the number is positive, then you are doing well. If the number is negative, then you have some work to do. Remember that you can always make adjustments, and in the beginning you will make many, but as you get the hang of it, you’ll hopefully start to see smaller negative numbers.