Simple budgeting will change your life, alleviate stress
By Sarah Stubbs
It’s the norm to be broke and in school. It’s so normal that it’s been the subject of millions of memes and it’s an easy comeback to any predicament you could be in “hey, give me a break, I’m a broke college student.”
The average college student is already thousands of dollars in debt, dependent on federal and/or private loans to foot the bill for his or her college education. And since hardly anyone is paying for his or her education on-the-spot and in cash, I’m afraid that the average millennial does not know the value of a dollar.
Thanks to the internet and social media, we are living in an age of instant gratification. For the most part, we’re not thinking about a 401K, life insurance, investing, or even an emergency savings account. We can’t see that far into the future. Debt is something we will have to deal with later down the road. It feels so far away that we just worry about whether or not we have enough money for the essentials: rent, Chipotle, Jimmy John’s, and cash to spend at the bars on the weekends.
Everyone’s financial situation is different. Some of us are totally independent from our parents, some are half-way dependent on their parents, and a select few have everything taken care of. No matter your situation, simple budgeting will change your life and teach you the value of a dollar.
Last spring semester was extremely stressful for me. Focused on completing my internship, managing the Pulse, getting good grades, and waitressing enough so that I could pay my bills, I didn’t sleep much and I ate horribly. I also didn’t pay attention to where my money was going. Since I’m a waitress, my paycheck is always in my pocket after I leave each shift. I wasn’t keeping track of how much I made each night and I simply spent my money on anything I wanted I wanted in the moment (which was mostly expensive coffee and fast food).
Since I was spending so much energy stressing and feeling sorry for myself about being so busy, I never thought that I had time to plan or budget. I’m here to tell you that you must make time to take ahold of your finances, no matter how much (or how little) money you make. A just-throw-it-in-the-bag attitude – no matter how deep your pockets are – is not going to get you far.
I’m still just as busy as ever, but I’m significantly less stressed now that I budget my money. I only spend about 15 minutes a week updating my budget and planning for the next month. If you think you can spare 15 minutes a week to get a grip on your finances, consider the following:
How to get started
Write everything down. There is so much power in knowing how much money you already have, how much money you make, and where that money is going. The biggest revelation for me was keeping a record of every single transaction I made — whether it was with cash, my debit card, a check, or my credit card – I wrote down everything. After this I started categorizing my expenses into simple categories like groceries, shopping, eating out, entertainment, health, and shopping. When you do this
you will learn a lot about yourself and which habits you might need to adjust so that you can live within your means.
Needs vs. wants
Speaking of living within your means, know your needs vs. wants. Keep track of how much money you spend on needs (groceries, utilities, rent, medications, etc.) and how much you spend on wants (like the tab you forgot to close at Nino’s…). Understanding what you need to spend money on and what is just extra will help you set financial goals for the future. All of the money I spent on eating out during that rough, spring semester would’ve put a nice dent in my Europe trip fund. Figure out what is worth spending money on now that you need so that you can have what you want in the future.
Planning and meal-prepping
Once you know your tendencies and behavior when it comes to spending, it’s time to make a concrete plan of how much you will spend each month and what you will spend that on. When I first started budgeting, I knew I wanted to dramatically cut how much I was spending out at restaurants, ice cream shops, and bars. To do that I knew that I needed to start cooking more.
A good way that I’ve found to keep myself accountable is to grocery shop weekly and prep my lunches and dinners for Monday through Saturday every Sunday afternoon. When you already have food in your fridge that you’ve prepared for that night’s dinner, you’re less likely to go through the drive through.
Think groceries are too expensive and cooking all your meals won’t save you money? Think again. I budget $75/week for groceries and mostly buy all organic ingredients. Just counting Mondays-Saturdays, I’m only spending an average of $4.50/meal. I don’t know about you, but I spend a lot more than $4.50 when I eat at Chipotle or Jimmy John’s.
Zeroing out your budget
Finally, once you’ve gotten into the swing of things and have been staying within your means in each category of your budget, make sure you have a plan for the money that is left over – don’t let it just sit in your checking account because then you will be more likely to spend it. Consider starting an emergency savings account or a travel fund. If you’re really responsible, consider getting started on paying off your student loans.
It’s empowering to take control of your money and spend it strategically. When you’ve planned and prepared, unexpected expenses are more manageable and you will have comfort in knowing that you will be OK.
Are there any budgeting or money management techniques that I missed? Email me or tweet me and let’s talk personal finance.