Making out the most of your income and cutting down your expenses sometimes seem like a hard and challenging mission. Moreover, it might seem like a living with lots of limits and minimum fun. However, we can share with you some tips that will ruin these myths and will make saving a lot easier.
Budgeting is not always that hard to learn how to do. Planning expenses nowadays becomes an easy process that will only require you to have a device and software to manage your bills and income. No tedious notes and calculations.
If you would like to start planning your budget, make sure you install an app on your phone or computer that will help you understand your income and spending. Nowadays, there is a variety of apps that have similar features but have specifics that will suit your needs. Like, for example, you can find an app that will notify you if your spending on a particular category (for example, dining out) will exceed the maximum limit you set for yourself.
Managing your spending with help of modern technology is easier than ever and will not take much of your time, or your effort.
To understand your budget better, you need to set categories and find out your basic and additional or unexpected expenses. In order to be financially stable, you need to have a least some money in your bank account untouched as a fund for unexpected circumstances or additional purchases that you might not see coming yet. Like in the case when your computer suddenly breaks or if you need some dental work done. This sum can also be called a financial cushion and will allow you to feel much safer about your financial situation.
So, what can your basic expenses be? For example:
- Groceries, cafeteria meals
- Household items
- Cost of living, utilities, internet, phone
- Gas or transportation
These are more or less can be predicted and planned after a few months of tracking your budget. You know how many times a month you need to buy food and how much your average grocery cart costs, how much gas you need, or how much your rented apartment costs. Thus, you can easily plan your expenses with this knowledge.
If you are paying for your school right away, you need to add the cost of tuition and supplies, like textbooks, to your budget. Not that many students are able to pay for their tuition while they are still in college. Moreover, student loans can be exhausting and absolutely ruining even after you land a successful career. That’s why your payments towards your tuition should be planned and managed well.
We recommend starting paying off your student debt as early as you can. Even small sums spent on your loan can make it much easier later to pay it off. So, if you have a chance, add this category to your expenses and manage your loan with the help of your parents or financial advisors as there might be some options for you on how to make your loan less of a burden.
Unexpected or Additional Expenses
Many students face difficulties when it comes to understanding and prioritizing their expenses. For example, many of them go eating out and spend money on things they don’t really need, expensive clothes, parties, etc.
If you know how to prioritize your expenses and categorize them, you will not have any trouble defining which items you can afford and which you can’t. By paying your rent, tuition, and credit card expenses right away, you significantly reduce the chance of ending up not being able to make your end meet.
So, when it comes to additional expenses, like dining out, partying, buying gifts, or having a trip, it’s important to put them for later – after you plan your essentials for the month and know for sure you can afford that.
As it was said earlier, it’s better to have some amount saved on your account for things like Christmas presents or that concert that you really want to attend. Having an opportunity to avoid eating only instant noodles for a month because you have bought a ticket or a dress, is what makes you feel like you can really control your finances and spend your money wisely.
Make sure you have a category of additional expenses that can vary from month to month and trying not to spend all of it, saving some. You can even set up a system of envelopes to put your money while planning your expenses by categories and make it work for you in case you deal with cash often.
We hope you liked our simple tips that will help you plan your budget. Make sure to track your expenses – some people find it very useful to store their receipts and make their calculations at the end of the month. Maybe this method will for you too. Otherwise, you can write down what you bought and plan your budget using an app or a planner – try it and see that smart budgeting is definitely possible.