Budgeting is the process of calculating how much money you must earn or save during a particular timeframe and planning how you will spend the money. Simply put, budgeting is creating a plan for every dollar you have.
Access the budgeting tool at iGrad to help get started with budgeting.
How to Create a Budget
Below is an outline of tasks to assist with preparing a budget:
- Determine the timeframe
- If you are paying for college, you will want to create a budget for each semester.
- Once you are done college, if you receive your income and pay your expenses monthly, then you would create a monthly budget.
- Determine your income
- If you are paying for college, your income could be loans, money from bank accounts, etc.
- Once you are done college, your income will be the pay from your job.
- Determine your expenses
- Besides college tuition and fees, you may have living expenses as well as meals, books, etc.
- Once you are done college, your expenses could be your mortgage or rent, cell phone bill, utility bills, groceries, etc.
- Review your budget
- Subtract your expenses from your income to determine if you can cover your expenses.
- If you do not have enough income to cover your expenses, you will want to reduce your spending or search for additional sources of income, such as employment.
- You can also reduce your expenses. Some expenses will be fixed such as rent that won’t change but other expenses are variable such as groceries, entertainment, amenities, etc. that can be reduced by changing spending habits.
Budgeting Tips
While everyone’s financial situation is different, below are some budgeting tips for planning purposes starting with the 50-30-20 rule:
- Allocate 50% of your income for your “essential needs” such as housing, utilities, food and gas.
- Allocate 30% of your income for your “wants” such as entertainment, shopping and other amenities that you are important to you.
- Budget 20% of your income for savings.
- Saving is extremely important as you need to train yourself to make saving part of your routine. Even if you are unable to save 20% now, the key is starting to save so you learn the habit. Once you can save more, you can adjust the percentage later.
Budgeting Resources
Besides the budgeting tool at iGrad, other valuable budgeting resources are listed below: