Why is budgeting important?
The most common financial problem is spending more than you earn, and the easiest way to overspend is to not know how much money you have available. Tracking your income and expenses and creating a sensible budget is the best way to keep track and maintain control of your money. While it may be difficult to limit your spending initially, the long-term benefit will be your ability to meet your financial needs when the time comes.
How to build a budget
- Identify your income. As a student, your income probably comes from some combination of a part-time campus job, financial aid, and parental help.
- Evaluate your expenses. Over the course of one or two months, track your spending. You may choose to write them down, use a simple spreadsheet, or choose a budgeting app.
- Compare your expenses to your income. If you spend more than you earn, you should make spending adjustments.
- Put your expenses into need and want categories. If something is not a necessity, consider reducing or cutting that expense.
- Adjust your budget as necessary and remain flexible.
A budget does not have to be complicated—in fact, the most successful budgets are simple. The key is to develop a system that is applicable; the more likely you are to stick to the budget, the more effective it will be. If you find it difficult to stick to your budget, you may need to reassess your figures and make adjustments to better fit your needs and goals.