How To Balance Your Budget In 5 Steps

Budget is always the thing which troubles almost every student. Tuition, rent, bills… all drive us crazy. When we talk budget, we think about something painful: having to cancel the recreational activities, stop going to restaurants and no more parties. However, it is not the purpose of budget. In contrast, it is to help us to spend money smartly and provides us with a sense of safety. The following are my suggestions to balance a budget. Though different people are in different financial situations, I hope those suggestions can still help you in some way:

1. Set financial goals

Some people spend their money randomly because they don’t have a clear financial goal. When they get unexpected money, they overspend it— not only the extra part, but also the money they saved before.  When they find they’ve almost run out of money, they complain and do nothing. They enjoyed their life at the beginning of the month and cried at end. For them, my advice is setting financial goals. There are two types of financial goals: short-run and long term.  Though some experts say that you’d better focus on your daily spending, I prefer to set a weekly goal and a monthly goal. For students like us, who are paid weekly (if you have an on-campus position), and whose spending occurs mostly on weekends due to no time to do shopping on weekdays, a weekly financial goal is more reasonable. My weekly financial goal includes covering food and activities. And the rent payment, car loans, utilities bills, cell phone, clothing, and household supplies are included by my monthly financial goal. With two goals, I am able to manage my budget more effectively.

2. Track your income and expenses

In order to track your money, all you need is a notebook and a pen. Writing all the things down is the oldest but still effective way. You may prefer using spreadsheets. Then there are a lot of free budgeting examples online and you can choose your favorite to start budgeting now. What I recommend here is to use mobile apps. How many of you are with your smartphones 24/7? You can take advantage of it and use your fragmented time to manage your budget. When waiting for a bus, a meal, or during a class break, you can simply text in the app, which may just take several seconds but help you in the long run. Here is a list of budget apps: Mint, GoodBudget Budget Planner, Spending Tracker, Wally, Daily Budget Original, Spendee, Monny, EasyCost, etc. Choose one you like and make full use of it.

3. Adjust your habits (Optional)

After tracking your income and expenses, you now have a good understanding of your financial situation and where your money goes. Then you can start analyzing: how much did you pay on fixed committed expense (such as the rent), how much on variable committed expense (includes but not limits to groceries, utilities bill and gasoline), and how much on discretionary expenses (clothing, entertainment, luxuries, etc.)? If you still have money left for discretionary expenses on top of committed expenses, you’re in a good shape. If not, it’s high time that you should adjust your habits. Personally, I changed my eating habit after I came to Syracuse. I found that the food in most restaurants here is expensive and unworthy of the price, so I started cooking. Believe it or not, cooking by yourself is definitely the best way to save money. Seven bucks, the price of a footlong of Subway’s bread with several slices of beef, can be used to buy a whole beef steak which is worth at least $15 in restaurant. Even though all I bought is organic food with high price, it’s still cheaper compared to eating out. Moreover, cooking at home helps you to keep fit. You never know what ingredients the restaurant chef put in your meal after all!

4. Avoid overspending

The word “overspending” has different meanings to different people. For me, overspending means buying a coat for more than $600. But for some others, that may be normal. So here I’m not going to give any suggestions on what to buy or not to buy, but rather a friendly reminder that sometimes you overspend and you don’t realize it. It can happen when you’re eating in a restaurant without using the coupons, when you buy a cloth on sale which you don’t need and would never wear, or even when you forget to turn off the light and turn the home faucet on full force all the time. Details really matter to your budget. If you can save those unnecessary expenses, your budget will surprise you later.

5. Treat yourself

Now you’ve gone a long way on saving. If your income finally exceeds your expense, congratulations! But for the extra money you saved, you’d better have a plan as well.  If you have debt, you can pay it early. While not required, it can make long-term sense. Personally, I don’t have debt so I choose to split my money into two categories: one for unexpected expense (for emergency), one for rewarding myself. Once I met my monthly financial goal, I reward myself with a big meal, beautiful clothes, cute accessories or other things as “well-deserved” restitution for my effort. Those treats can encourage you to keep your budget and maintain your healthy financial habit.