How to Make a Budget...and Stick to It!

Making a budget and sticking to it is one of the greatest lessons in life. For some, it can also be one of life's greatest challenges. That's why the earlier you start with it, the easier it will be for you to adjust - and save!

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3 Steps to Making a Budget

One of the best ways to stay out of financial trouble while going to school is to make a budget. It may sound difficult, but it is a lot easier than running out of money for food or rent, or losing hundreds of dollars to overdraft fees. So before your electricity gets shut off, here are a few simple steps to organize and keep your finances on track.

Know When and Where the Dough Goes

Before you can develop an effective budget, you need to know where your money is coming from and where it needs to go. Make a list of all of your income and expenses, including the due date. Don't forget expenses that are paid quarterly or annually. Your list may look something like this:

  • Rent, $300, 1st
  • Cell phone, $50, 10th
  • Utilities, $60, 16th
  • Car insurance, $100, 18th OR public transportation fees, $20, weekly
  • Oil change and car maintenance, $50, quarterly
  • Groceries, $50, weekly
  • Entertainment, $40, bi-weekly
  • Tuition, $5,000, annually
  • Books, $400, semi-annually
  • Work income, $500, bi-weekly
  • Scholarship income, $1,000, annually
  • Student loan income, $3,000 annually

Create a Financial Spreadsheet and Plan Ahead

The next step is to take the information you've gathered and create a financial spreadsheet. Depending on your preference, you could use an Excel spreadsheet, a columnar pad or another software application. Create this spreadsheet at the end of the month for the upcoming month. This is where you coordinate your income with your expenses and their due dates, which allows you to see when you may be a little tight on groceries or when you may have an extra $20 for entertainment. For example:

Date ItemExpense Income
1stIncome $0$500
1stRent $300 $0
10thCell phone$50$0
Total$490 $500
18thCar Insurance$100$0
21stCar maintenance$50$0

Simple Spending

In order to keep things simple, pay bills with your debit card or checking account and use cash for your entertainment expenses. For instance, if you see that you have $40 for the week for recreational activities, avoid potential overspending by withdrawing the cash and only spending that cash.

Sticking With It

The trick to sticking with a budget is to find your motivating factor. Perhaps your motivation is to avoid those painful overdraft fees. Or you could reward yourself each month that you stick to the budget with a small treat, such as an extra night out, a new shirt, a music download or whatever tickles your fancy (and fits in the budget)! Just remember, making a budget each month is a lot less painful than sitting in the dark, hungry and with no cell phone.

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