A budget is made up of two parts: cash in and cash out – and an appreciation of where you stand in each area will help you. Before deciding what to include in a budget, decide how strictly you need to adhere to your set allotments. If you tend to spend a little frivolously, you may want your budget to serve as a warning signal, letting you know when you’re getting out of control. On the other hand, if you are very conservative with your money, use a budget as a helpful guideline.
Try to look at your existing patterns of spending and earnings to help form an outline of your future budget. Track your spending for a couple of weeks to figure out where and what you’re spending and, if times are tight, where you can reduce any unnecessary expenses.
Next, list out your sources of income (I know, I know, there may not be many at times), including monies from grants, scholarships, summer jobs, parents and so on. Then review your expenses such as groceries, text books, and tuition to see whether you’re in the black (you earn more than you spend) or in the red (you owe more than you make).
Once you have an idea of the cash in and cash out, it’s time to pace yourself. If you know you spend a lot at the beginning of the month or beginning of the quarter, try to stick to your budget on a weekly basis so you don’t get stuck surviving on ramen noodles at the end of the month or quarter.
Now time for a pet peeve of mine: Credit Cards. Now I’m not bashing credit cards in general. In fact, if used correctly they can be a huge benefit to increasing your overall credit score. But here is where the peeve comes in. If there is an organization on your campus offering you a free meal or free ‘whatever’ and all you have to do is sign up for a credit card, DON’T! It could negatively impact your credit score and there are numerous horror stories about students who in one day signed up for multiple credit cards just for the free stuff. Do yourself, your credit score, and your budget a favor by limiting yourself to one or two credit cards.
And don't forget to manage your credit cards wisely – paying them on time and avoiding fees, penalties and interest charges. Credit cards should be used in the short-term to manage cash and not used as long-term debt.
So remember the budget basics: cash in and cash out. It may sound cliché, but following some of the budget tips mentioned and keeping track of where and what you spend will go a very long way toward long-term fiscal responsibility in your personal budget.