budgeting money and finances for dummies

BUDGETING MONEY AND FINANCES FOR DUMMIES HOW TO

Variable expenses are those you control – like groceries, eating out, and entertainment – and they can fluctuate from month to month. Fixed expenses generally stay about the same from month to month – like your rent or your cell phone bill – and you may be locked in to those expenses or unable to negotiate/reduce them, at least for a time. Your spending will generally fall into two categories: fixed expenses and variable expenses. You might even be surprised when you look at a breakdown of your spending. If you use a debit card regularly, an easy way to start is to look at your bank account online and see how your expenses add up. This step can be a bit time-consuming the first time you do it, but it is definitely worthwhile in helping you figure out how you currently manage your money. Once you know how much income you have, you want to track all of your expenses in a month. It's better to underspend and end up with a surplus. Tip: When starting a budget, it's a good idea to underestimate your income, rather than overestimate. If you will receive a financial aid refund, make sure your aid refund lasts for the whole quarter. If your parents will give you money, make a plan with them about when and how you will receive those funds, and be prepared to talk to them about what those funds will cover. If you work during the summers to save for school, you might also think of your summer savings as 'income' during the year – divide your total savings by the number of months you will be in school. Income may come from a number of different sources, including your paychecks from work, contributions from parents, other support from family, and financial aid refunds. The first step in budgeting is to figure out your total income. Source: Federal Student Aid Review your income & resources Your budget should be tailored to meet your income and fit your lifestyle. A successful budget can help you identify your needs versus wants, control wasteful spending, and adapt as your financial situation changes over time.Įveryone's income, resources, and priorities are different, so budgets aren't one-size-fits-all. You can create a budget for a month, a quarter, or a year, depending on your needs. In its simplest form, a budget is just a summary of your income and expenses for a given period of time. On the other hand, you might think of budgeting as a tool to prioritize your spending, and to help determine and reach your financial goals.Ĭreating a budget means learning to choose where your money is going, rather than wondering where it all went. You might think of budgeting (or 'living on a budget') as living below a certain standard or not being able to afford the things you want.

The word 'budget' means different things to different people. Related Resources Budgeting (Federal Student Aid) Preparing for Graduate/Professional School.

Saving in College ExpandSaving in College Submenu.National Student Loan Data System (NSLDS).

Student Loan Management ExpandStudent Loan Management Submenu.

Living Off Campus ExpandLiving Off Campus Submenu.

Financial Planning ExpandFinancial Planning Submenu.

By doing this, you’ll only be left with the 30% allocated to “wants” in your bank account, which you can then spend during the month without worrying about whether you are overspending or not meeting your budgeting goals. This means that your income is automatically divided at the beginning of the month in accordance with the 50/30/20 rule. If you decide to opt for the 50/30/20 method, consider automating your expenses each month.

BUDGETING MONEY AND FINANCES FOR DUMMIES HOW TO

The 50/30/20 rule was actually created by US senator Elizabeth Warren, a bankruptcy specialist at Harvard, as a way to show American citizens how to budget and save money and how to budget money on a low income. 20% goes into your savings or towards paying off debt.your variable costs such as eating out, trips to the hairdresser and clothes shopping. 30% is allocated to your “wants,” i.e.50% of your income goes towards your “needs,” i.e.The 50/30/20 rule encourages your budget to look as follows:

Budgeting money and finances for dummies