Dollars and Common Sense
The importance of maintaining a balanced budget can never be overemphasized. If you’ve acquired student loan debt, you’ll have to pay that off within six months of graduation (unless you’re pursuing a higher degree), so the last thing you want to do is accrue even more debt! Following simple guidelines now will help lay the foundation for a stable financial future, but living within your means doesn’t have to be painful. Embrace smart spending by creating a budget that works for you, not against you.
Define your terms. For the next week, track everything you spend money on – rent, food, transportation, books, etc. – and compile a master list. Add in any recurring costs, such as holiday shopping or small trips. These are your expenses, and when considered against your income, they will give you a general idea of your financial needs. Make conservative estimates—it’s always better to overestimate your spending and underestimate your income. Doing this gives you a built-in cushion for savings and emergencies. Begin checking your budget every month to make sure you’re still on track, and adjust your estimates accordingly.
Make your cuts. Budgeting is all about choices, and simple math will show you that you cannot always have what you want. Your biggest expenditures should be easy to see by looking at your budget. Be honest with yourself—what can you live without?
- Take baby steps. Small changes make for big savings in the long run. Maybe you will eat out less, buy non-perishables in bulk, ask if your transportation can be reimbursed, make fewer impulse shopping decisions, carry less cash, or buy used textbooks.
- Phone a friend. Saving money is much easier when your friends are on the same page. Not only can you hold one another accountable to your budgets, but a group will also generate even more ideas for frugal fun.
- Spend less to impress. Anyone worth knowing with will like you for you, not your wallet. Don’t waste money trying to impress people whose values are out of sorts.
- Kick a bad habit. Smoking is the classic example, and a dangerous and increasingly expensive habit. But junk food and unnecessary driving can hurt your wallet as well.
Think ahead. The hardest rule for most people to follow? Save 10 percent of every paycheck. Although retirement seems ridiculously far off and you don’t see any family or medical emergencies on the horizon, now is the best time to begin saving for them. Establishing the habit now will make it easier to continue once those expenses become a more pressing reality, and since you only have yourself to support, your day-to-day costs are probably the lowest they will ever be. Starting a “rainy day” fund now can also increase investment opportunities in the future. Not everything has to be filed away indefinitely, however—if you want to take an exotic vacation (or even just a weekend trip to the beach), put a little bit of money away toward that goal every week. Anticipating a special experience will make it easier to cut back in other parts of your life.
– Anna Walsh