Get Organized With a Budget
To take control of your money and your financial life, you have to get organized. And the most effective tool for this is a budget. When you create a personal budget, you organize your use of money into spending categories and then set your financial priorities. Your budget will help you pace your spending and stay on track to reach financial goals that are important to you.
Creating a workable budget while in college can help you:
- Meet personal goals such as studying abroad or buying a car or a new computer
- Become better prepared for emergencies
- Stay out of debt
- Keep accurate and up-to-date records
- Start thinking about longer-term financial planning
Creating a Budget
1. Track your spending.
To become aware of exactly how you’re currently spending your money, make note of every single penny that you spend over the next month. You can use a paper notebook, a spreadsheet app, a notepad in your phone, or whatever system works best for you.
2. Pay major bills first.
Set aside money for your tuition, books, student fees, meal tickets, and other large annual or semiannual costs. Once these amounts are subtracted from your bank balance, you'll have a more accurate starting point from which to plan your budget for the rest of the semester.
3. Create a spending plan.
Think of a spending plan as a map. Where do you want your money to take you? A spending plan can help get you there. Follow these steps:
- Identify income. Use the Income Worksheet to add up all sources of money you receive each month, such as family help, anticipated job income, and work-study income.
- List your expenses. Use your spending notebook to determine your actual expenses and complete the Expenses Worksheet using this information.
- Compare income with expenses. This Income vs. Expenses Worksheet will help you do the math.
- Set aside money for goals. If your income is higher than your expenses, great! That means you can routinely set aside some money for your goals—a new laptop, emergency savings, or a spring break trip.
- Make adjustments. If your expenses are higher than your income, you’ll need to cut back on your spending or increase your income. For tips on cutting expenses, check out Identifying Needs vs. Wants and Plugging Spending Leaks. And for tips and strategies for boosting your income, see Earning Spending Money.
Adjusting a Budget
As your money situation changes throughout the semester or school year, you will want to adjust your budget.
Income increase. Did you take on a part-time job or gain a reliable new income through other sources? Make the most of your new income by paying down credit card debt or adding money to a savings account. If you don’t have a savings account, now is a great time to open one. Visit Banking Your Money to learn more.
Income decrease. Losing a job, a scholarship, or other income source forces you to tighten your spending. These steps can help you adjust your budget without cutting out entire spending categories:
- List the areas in your monthly spending plan that are not essential to your living situation, such as snacks, entertainment, and new clothing.
- Figure out how much money you need to decrease from your monthly expenses.
- Divide the amount of your monthly income reduction by the number of spending categories you selected for cutting back expenses.
For example: Let’s say you choose three different spending categories for trimming expenses. If your monthly income reduction is $150, you would divide that amount by three, for a spending-reduction target of $50 for each category.
- Then, subtract your targeted reduction from the existing “budgeted amount” column in each spending category in your spending plan. That’s the maximum amount you can now spend in each category and stay within your budget.
Ready to start building your personal budget? Try the Budget Wizard
. After creating your budget in the Budget Wizard, you can log in to access and edit your budget at any time.