Save yourself trouble later, start up that budget today
How many of you know, to the dollar, how much you have spent this semester? How about this month?
How many of you go to bed knowing exactly how much you spent that day?
While your financial issues at hand may not seem that significant, after all, a student’s budget is not the same as a family budget, the tools you gain today will help later on in life. Proper budgeting will lead to a better chance at financial success.
Statistically speaking, when asked what leads to financial problems, most people state that they did not realize what they were spending money on. And the truth is, we’ve all done it.
Life is quite simply more expensive than anyone gives it credit for.
Avoiding these pitfalls may seem like a daunting task, but in reality it is relatively easy if you can train yourself to do a few simple tasks throughout the day.
The first and most important step is to buy some personal financial software. The two most popular and easiest to use are Intuit’s Quicken and Microsoft’s Money. The software is not expensive and will produce far more data than you may think you need.
However, getting familiar with either of these products will give you an upper hand when your budget is larger, tax implications become more serious and the thought of an audit from the IRS haunts your sleep.
In today’s world, there is no excuse not to have one of these systems. Most large banks, and many smaller ones, will download your banking activity, including the ever-increasing debit card use, directly into your financial software.
From there, you can categorize the spending however you want. For instance, as a student, you may want to break down the categories into broad categories of expense, such as “entertainment,” “school expenses” and “automotive,” amongst others. This will let you know exactly how much money you are spending away from school.
Knowing where your money goes is always half the battle.
While we have established that these financial software products are very good at downloading bank data, cash can also be a problem. In today’s electronic world, cash is almost dead, but for those of you who still feel as if cash is king (as I do), the best bet is to take money out of a bank at regular intervals and know that this cash will be used for certain purposes.
Do not forget to make sure you record these transactions in your software. That way, when you wake up after a late night of drinking at The Wal, you will know exactly how much money you spent buying rounds; this will also give you proof and a great argument with your friends that it is their turn to buy the next round.
So now you know what you are spending each and every day. But how does this help with your shortfalls each month?
Do you get money from your parents or do you work for your spending money? Either way, budgeting what you will need to spend will let you know how much room you have for stuff you do not need, no matter how great a deal it is.
If you use Microsoft Excel, there are templates that are built right into the software that have budgets. Do a search on www.office.microsoft.com for financial budgets. Both Quicken and Money have budgeting procedures too, so you may want to check out those for one-stop shopping. These are very easy to download and start using.
When constructing your budget, the most important thing to do is be realistic. If you are going to rely on this budget to ensure you have money, it is often better to overestimate expenses and underestimate income. This will help ensure that at the end of the month, you will not be relying on money you thought you would have to pay bills.
Establishing and staying within a budget is one of the most difficult tasks that anyone has to do, but learning to do it now will make the system that much easier when your financial issues become more complex.
Geoff Zahler is a columnist for The Nevada Sagebrush. He can be reached at gzahler@nevadasagebrush.com.
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on Tuesday, November 11th, 2008 at 12:29 am and is filed under Perspectives.
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