College Connect: Getting started on budgeting

Posted By Natalie Savarino

DeRose-Headshot[2]By Adam DeRose

After I landed my first job out of college, finances were tight. The consistent paychecks were great, but I also struggled figuring out how much money I had to spend on non-essential purchases (restaurants, drinks, events, etc.) after paying expenses like rent, insurance and utilities. After a few overdraft fees, I decided to take a stab at budgeting. Here are a few suggestions.

First, log monthly spending. I collected my receipts and read through credit card and bank statements. I organized them into categories such housing, food and drink, personal care, transportation. Armed with that information in an excel spreadsheet, I broke the categories into subgroups: rent, utilities, restaurants, alcohol, pharmacy, clothing, gym, bike maintenance, gas, etc. I was amazed by how much I spent on the subgroups of restaurants and alcohol (not uncommon for young working Chicagoans like myself, but excessive nevertheless).

After I had logged my spending, I set out to make a budget. This included my income as well as my expenses. I looked online for a template of an excel budget. It was a helpful starting point but since my expenses were unique to my life (maybe not everyone needs to budget monthly for bicycle tire tubes), I made adjustments based on the information I collected from the previous month and more conservative expectations I could expect. It worked.

If you’re comfortable with sharing banking information with a third-party company, several apps collect your expenses and create budgets and reports based on that information, some even offer alerts when bank account levels are low, convenient if you don’t like paying overdraft fees.

It can be scary to see in writing where all your money is going. For me, it was the first step to becoming more financially responsible and starting to think about longer-term goals. 

Adam DeRose is a student at Arizona State University 

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