Budget 101: Biting the Bullet

Tonight I completed an item on my long-term to-do list: make a budget. Gone are the days of “I thought I had a ten in here somewhere…” and “ Eh, there should be enough in my account to cover it.” I’ve taken one more unflinching step toward successful  adulthood.

All college students can benefit from having a budget, regardless of financial situation. Planning out your spending can help reduce debt, save for big purchases, and create good habits for the future. By budget I don’t mean a vague idea of how much money you have and determination to use it well. I mean a literal, hard numbers record of where that cash is going. Dieters keep food journals and athletes charts of training times; why shouldn’t spenders have records, too?

Everybody has their own way of doing things, so for some this record might consist of a notebook and for others a document on your computer or iPhone. I’m copying my Mom’s model, which she has used for years. It’s an Excel spreadsheet. Listed in the first column are categories for everything I spend money on: groceries, clothes, books, movies, eating out, etc. I love to dance so there’s a dance fund in there too. Across the top row are the months, allowing two columns of space for each month. In one column goes the amount of money I expect to spend, and in the second goes what I have spent. Every day, I open up the Excel sheet and type whatever I bought that day into each category. It’s that simple.

The Excel budget, with numbers changed.

I find that to keep on track, it’s good to have an ultimate goal you’re saving towards. That goal could be anything from making ends meet to buying a new car. If your goal is truly important to you, it will be easier to stick to the plan. Here are some ideas:

Save enough money for four month’s rent. This is my personal goal. It gives me the financial freedom to move to my city of choice after graduation and time to look for a good job.

Pay off college debt. Even if you can only do a little now, it gets you in the habit of not ignoring the elephant in the room.

Study abroad. A summer in Paris is way better than a summer flipping burgers.

New car. Your grandma’s clunker is going to give out someday.

These goals bring into focus the heart of financial planning. Far from turning you into a parsimonious miser, paying attention to spending will make you the best kind of dreamer–the kind who actually makes it.