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What is Budgeting?

Budgeting is important for your financial stability, ensuring you can pay common expenses like rent, tuition, student loans, credit card bills, and entertainment. But what exactly is budgeting? It's a proactive approach to organizing your finances. Budgeting ensures you're not spending more than you're making, allowing you to plan for short- and long-term expenses. It's an easy, helpful way for people with all types of income and expenses to keep their finances in order. You simply want to be able to track your income left over after all expenses to ensure you're not falling into debt.

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You're earning more than you're spending, which is where you want your finances to be. You can afford your expenses and maintain a good credit rating.

You're spending more than you're earning, which puts you in danger of going into debt and having to dig your way out later.

Set Financial Goals

Setting realistic financial goals gives you a head start to create your budget. It's important to have something to work toward financially, whether it's paying all of your bills on time every month or saving up for a vacation. But it's just as important to ensure you're working toward realistic goals you can actually meet so you don't end up disappointed by missing goals outside your capabilities. Think about what kinds of goals you want to set, both short- and long-term.

• Save enough money for next semester's books.
• Pay extra on your student loans or other debt payments each month.

• Pay off your student loans within the next five years.
• Save up for the down payment for a new car.

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Specific: Smart goals are specific enough to suggest action. Specify why you're saving money, not just that you want to save. To return to the SMART goals navigation, press shift plus tab.

Measurable: Track your progress, especially when you meet goals. Track milestones too, like saving $150 for that $300 bike. You're halfway there! To return to the SMART goals navigation, press shift plus tab.

Attainable: Your goals must be attainable; don't set yourself up for failure. Don't rely on a lottery ticket for extra money. To return to the SMART goals navigation, press shift plus tab.

Reasonable: Your goals need to make sense; don't struggle toward goals that don't fit your needs. That bike will save money on gas, provide exercise, and be more efficient than walking. To return to the SMART goals navigation, press shift plus tab.

Time-Related: Set definite, realistic target dates for your goals, and hold yourself to them. Get that bike by April so you have it for the seasons where you can actually ride it. To return to the SMART goals navigation, press shift plus tab.

Once you've thought out your goals, write them down and hang them up. Having something you can see every day will make those goals a reality to you.

Once you get the hang of it, budgeting is easy. However, there are a lot of ways you can get derailed from your budget. Here are some additional tips to help keep you on track with your budgeting.

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Be Honest with Yourself.
When you first start your budget, if you're not honest about the things you're already spending money on, it's going to be hard to set goals and properly track your expenses. Start with your current financial situation and make adjustments after you've assessed where you're at. To return to the budgeting tips navigation, press shift plus tab.

Set Realistic, Flexible Goals
It's easier to stay motivated to stick to your budget if you have clear, realistic goals and if you allow yourself rewards for completing goals. Just ensure you work those rewards into your budget so you don't have to make up for excess money spent on a night out later on. To return to the budgeting tips navigation, press shift plus tab.

Pay When You Can.
You don't have to wait until payments are due. You might find that it's easier for you to stay on track if you pay things ahead of when they're due. This will not only help you juggle your payments, it's also great for your credit to never miss a payment. To return to the budgeting tips navigation, press shift plus tab.

Plan All Aspects of Your Spending
Consider how you're buying as well as what you're buying. Plan your errands so you don't have to make unnecessary trips. Make lists when you go to the grocery store so you don't forget something you'll have to pick up later. To return to the budgeting tips navigation, press shift plus tab.

Steps for Getting Started

It's typically easiest to create a budget on a computer, either in a spreadsheet or using budgeting software. Spreadsheets allow you to easily calculate your budget in numerous ways (e.g., monthly or yearly totals). Once you've decided how you want to create your budget, you can get started.

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Start with your income.
Track the amount of money you have coming in every month, from jobs, work study, scholarships, grants, student loans, or money given to you. When tracking income from your job, it's easiest to use the amount you take home after taxes. This is the pool of money you have available for your budget, so get it as accurate as possible. To return to the budgeting steps navigation, press shift plus tab.

Budget monthly, not by the paycheck.
It forces you to think longer-term without feeling your budget is impossible to maintain. To return to the budgeting steps navigation, press shift plus tab.

Check Your Budget

See how you're doing with your current monthly spending, and whether or not you need to reevaluate it, by entering the appropriate amounts for the upcoming month in our budget checker.