How to Create a Budget
By Courtney White, Stride Career Prep Success Coach
Thinking of getting your first job? Heading to college soon? You may have money on your mind. Managing your money is very important to success (and comfort!) in your future. Even if you do not have much money, it is never too early to start saving and thinking of how to best use your money to your advantage.
If the idea of managing money seems overwhelming to you, don’t fear. The good thing about clicking on this blog is that you are demonstrating that you care about your financial future and have a desire to educate yourself on the steps to take to control your money. A key element in achieving this is having a budget. A budget is simply a spending plan based on your income and expenses. For example, if you are not working, income for you may be in the form of money you get from parents for your allowance or from side projects you do for friends and loved ones such as mowing the lawn or selling your old things online. Whatever your source of income is, you can budget it by following these simple tips:
Identify Your Income
Document all of the ways you receive money, including your paychecks, tips, gifts or other sources, to see how much you have to work with.
Identify Everything You Spend
Try this for an entire month so that you can determine exactly what you spend your money on. Include everything that you spend, even small purchases like vending machine snacks. Add up the amount you spend each month. What you see may surprise you. To begin creating your budget, break down the spending you’ve tracked into categories. For example: food, entertainment, shopping, and miscellaneous expenses.
Compare Your Income vs. Spending
This is the fun part. You can find helpful templates online (or using Microsoft Excel, which is used in the examples shown) to help do the math for you. Or you can jot it down in your favorite journal or notebook. Either way, you should be able to see a clear indication of your expenses and how much money you earn every month. This will provide you a snapshot of where you can save, cut back if necessary, or earn more if you are working toward a specific goal or purchase.
Review your budget often and plan for your future income. Check for ways in which you can modify spending to build a solid savings and emergency fund. A key with budgeting is that you want prioritize your spending so that you can meet short-term goals (saving up for a down payment on a car or deposit for your first apartment) and even long-term goals, such as paying off student loans, if you intend to borrow. Map out your financial goals as you are creating your budget to set yourself up for success. In addition to budgeting, you also want to begin thinking about establishing credit for future use to guarantee you can get the best rates on essential purchases that you may potentially want to finance (financing means to make payments over time). Treat budgeting and finances in your life like any other subject that you would study. Stay in the know, read up on money matters, and equip yourself for a secure financial future. You got this!
Click Here for templates you can use to start creating your very own budget!
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