Most recent print edition: Jul 28

– Last updated: Today

• About Us
• |
• Contact Us
• |
• Advertising
• |
• Submissions

Columnists

Modern Yuppie: How to create a budget

Amber Yake - News Editor

Whether you’re making $50, $500 or $5,000 per month it’s important to have a strong grasp on your finances and the best way to do that is by following a budget.

Budgeting can seem hard and unattainable, but once you have a strong grip on your finances you won’t regret it.

Stop telling yourself you’ll learn how to budget once you’re in the working world and do it now.

Here’s how to set a realistic, working budget for yourself:

Step 1: Goal Setting

Effective budgeting requires you to set goals for yourself. Think of your goals as your destination and your budget as the journey that’s going to get you there. You want to travel to Europe within a year after you graduate? Do-able. You just need to start saving and budgeting now.

Figure out how much money you make per month and how much you can realistically save and then start saving that money each month. It’s a simple formula, your income – expenses = potential savings.

Step 2: Assess your finances

Organize your expenses into three categories: fixed costs, variable costs and your income. Fixed costs are items you pay for and buy on a regular basis; groceries, gas and rent fall into this category. Variable costs are things you don’t buy on a regular basis, things like a random trip to Starbucks or a shopping spree for new shoes.

Now, you need to figure out a situation where total expenses are less than or equal to your income. Then you can start budgeting properly without going into debt.

Step 3: Planning your available resources

This is where that excel spreadsheet comes in, it should have two general sections; income and expenses. In the income section note where your money is coming from, a part-time job, student loans, gift money, whatever.

Once you’ve figured out how much money you’re bringing in a month, it’s time to figure out where it’s going. Figure out what your fixed expenses are that are a high priority, i.e. rent, and what your fixed expenses are that aren’t a high priority, i.e. a $150 phone bill for your iPhone.

This is where you figure out where and how you can cut costs so that you can put more money into a savings/emergency funds account and stop using credit.

Track your expenses on a weekly or daily basis so you don’t lose track of the money you’re spending. Before long, it’ll become like second nature to you.

Step 4: Motivation and dedication

You can’t budget for a week or month and then stop because you don’t have a few thousand dollars saved up. Money and budgeting is like losing weight. It takes time.

It can be hard to stop yourself from making unnecessary purchases when you’re stressed out but you need to do it. This is where goal setting comes in. Have a realistic goal for how much money you’d like to save in a month, a year, five years and start working towards it.