Money Management: Tips for Creating a Budget

Maybe you’re a student who has received a scholarship and you don’t have to pay for tuition, but you still need to make a budget plan.

Or, maybe you’re just the type of person who likes planning ahead. Either way, this article will introduce tips on how to properly create a budget for yourself that works out well in the future.

Tips for Creating a Budget

1 – Creating a Basic Budget Plan

2 – How to Save Money on Expenses & Bills

3 – Saving Money for Huge Purchases (Car, House)

4- Keeping Track of Your Finances with Personal Finance Management Software

1 – Creating a Basic Budget Plan

Before you create a budget plan, you need to know your income. You can add up all of the money that comes in (even bar/clubbing money if it has been included in your paycheck). If you have a job, count your hourly rate and multiply it by 40 hours. Can’t remember how much you’ve made? Ask your boss! Once you have a total, be sure to include your income from any other sources, such as tips or money earned from a side job.

Once that’s done, it’s time to create a budget plan. First up is necessary expenses: rent/dorm fees, utilities (electricity and water bills), groceries, phone bill (if you have one), internet bill (again, if you have one), and any other bills that are related to your housing situation. These expenses should be put in their own category on your budget plan.

Next up is discretionary spending. This includes money spent on food outside of the grocery store, clothes, entertainment funds for clubs/bars/movies, subscriptions (maybe even Netflix), and anything else you spend money on outside of basic living expenses.

Finally, we have savings. Set up a separate bank account for your savings goals: car, house, vacation trip next year, etc. Then create automatic transfers from your checking to your saving that will occur each month. An easy way to do this is to set up your checking account with direct deposit and then transfer money from your checking to your savings at the end of every month. It’s also a good idea to save some extra money in cash that you can put into a safe or safety deposit box at home; there isn’t a banking system for these items, but it will be nice to have if you ever need quick money.

2 – How to Save Money on Expenses & Bills

Of course, the best way to save money is not to use it in the first place. You can do this by buying your groceries and other necessities for a couple of months at a time (see our article on shopping ). This will postpone spending money until you actually need it! If you go out every weekend, cook food at home instead. If you like clothes, make sure to buy them on sale (see our article on fashion ).

3 – Saving Money for Huge Purchases (Car, House)

If you would like to save money for a car or house, it’s best to start saving early on. You can always put away some of your paychecks each month into savings instead of spending it all immediately. Don’t forget about the power of compounding interest! The earlier you start saving money for something, the less you will have to contribute each month in order to reach your goal.

4- Keeping Track of Your Finances with Personal Finance Management Software

Once you have created a budget plan and started saving money, it’s important to keep track of your finances so that you know where your money is going. This article will introduce two excel worksheets for tracking finances: one for income/expenses and one for bills/savings goals.

The first sheet, Income/Expense, keeps track of how much money you make in a certain time period (month or year) and where your money is going. The left side tracks income, while the right track’s expenses. There is also space to record any unexpected bills; this can be helpful when budgeting for next month.

The second sheet, Bills/Savings Goals, tracks your bills/savings goals. You can record how much of your money goes towards each bill and how much you save each month towards a goal. There is also space to track specific amounts that come in or go out throughout the month, such as tip money. If you fill up all the boxes with numbers and try to find an empty spot, you will realize that there isn’t one! This sheet is color-coded so that the necessary expenses are green and the discretionary spending is blue.

Conclusion

Budgeting is a great way to save up money, especially for large expenses like an expensive vacation trip. If you keep track of your spending (and make sure to use what you spend your money on), then budgeting will be easier because you will know where your money is going. Using excel spreadsheets for this process is the easiest option, but pen and paper work as well. In the end, it’s better to have a budget plan than not to have one!

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