If you want to become more financially stable, the first step is to develop a budget. Without a budget, you’ll struggle to manage your money in the long run. Even if you’ve never taken an accounting class and numbers make you kind of nervous, you can come up with a system that works for you. The basics of budgeting are simple:
The goal is for the difference to be positive, meaning you made more than you spent. This allows you to have funds on hand for emergencies and other unexpected expenses. A good budget also helps you stay organized and pay bills on time.
In order to figure out how much money you make, think about every income source you have. This includes wages from a job, interest earned on money in a bank account, financial aid, and money from your parents. Then consider all your expenses, such as tuition, housing, interest on loans, meals, gas, entertainment, and so forth. It is often helpful to define expenses as either fixed or variable. Fixed expenses are those that do not change from month to month, like tuition and housing expenses. Variable expenses are those that may change from month to month, such as how much you spend on groceries and going to the movies. If you find that your expenses outweigh your income, examine your variable expenses and consider where you can cut back.
There are a lot of great budget worksheets available online. Below are a few to get you started, but you can also create your own. I just use a spreadsheet in Google Drive; it’s not fancy, but it gets the job done. Many banks and credit unions, such as UW Credit Union, also help you track your income and expenses through online banking services.
If you want to use a higher-tech option than the worksheets above, consider You Need a Budget or Mint.com, both with phone apps for tracking spending and more. YNAB does have a cost, but they do offer it to students free for one year beyond the trial period. Mint appears to be free at this time.