Creating your Budget
Follow our steps for making an effective budget:
Identify a Time Frame
What length of time is this budget for?
- Weekly
- Monthly
- Semester-based
Once you get more comfortable with budgeting, you can create budgets for even longer periods of time, such as a yearly budget.
Do the Math
Calculate your income and expenses for your given time frame to determine how much money you have to work with.
What kind of compensation do I receive?
- Hourly
- Salary
- Commission-based
How often do I get paid?
- Weekly
- Bi-weekly
- Monthly
Do I understand my paycheck?
- Gross vs. net income
- What taxes and fees are deducted?
Before you begin calculating your expenses, determine whether they are fixed or variable.
The cost of fixed expenses does not change.
Example: Car insurance and rent are examples of fixed expenses
The cost of variable expenses does change.
Example: Food and credit card payments are examples of variable expenses.
Helpful Hint:Taking note of when bills are due is a great way to keep track of your expenses. In addition, keeping a spending diary will help track of how much you're spending and where your money is going!
Review and Adjust
After a week/month/semester, revisit your budget and ask yourself:
- Have I been over/underspending?
- Where has most of my money been going?
- Is my method working?