By Ethan Cole
I’m going to start this off by saying I did not have advice on how to budget I was simply told “It would be a good idea.” Well unfortunately those words are going to cut it. In the past few months, I’ve got some very helpful advice on how to budget and how to track where your money is going every month. Let’s get started.
Before writing out a plan or planning how much you must spend you should take a month and observe your spending habits and what your money is going towards. This is a very important step and very crucial for what a realistic budget for you can look like. Now if you’d like to you can use your previous month spending to set a budget for the current month you are in or the following one.
Looking at what you spend money on during a month period helps you realize what you need in a month and what you spend money on that you could’ve gone without. The first step of writing any budget is calculating what income you have in a month and what you pay for monthly such as rent, utilities, car payment, or subscriptions. Also look for things you spent money on that you could’ve gone without such as maybe not going out to eat those extra times and stay at home and eat what you already bought.
When you first make a budget, and you can look at the previous months spending on maybe something like food for example I always try to budget for spending less than I did the previous month or it was already a good range then budget for the same. This helps you save money towards other things, or you can “pay yourself” the extra money you save whether that means putting it into a savings account or going and doing or buying something you want.
Just because you set the budget doesn’t mean it’s automatically going to work out. You must be disciplined enough to want to stick to it. Set a goal of maybe something you want to do or something that can be achievable from saving money. For example, I have a huge goal and that is to go to Miami for the first time to see my favorite NFL team the Miami Dolphins play at their home stadium. This will be a very expensive trip and I would rather save a little money now and maybe be a little bit sad that I didn’t go out to eat a few more days a month but when I get there it will all be worth it!
Start an excel sheet or start writing in a notebook everything you buy. When you do this write done why you bought it too and here’s why you should do that. If you can’t come up with a good enough reason to buy something other than “I wanted it or I had the money” it was probably something, you could’ve gone without, and it could of potentially shorted you in an area of more need. Even when shopping now I always ask myself “Why am I buying this? Do I have a good enough reason to? Is it going to short me money on my budget?” If you don’t ask yourself questions and spend recklessly it is going to put you in a tough spot sooner or later.
For example, I bought a PS5 about a month ago and my reason was “I’ve wanted one for a long time.” I ended up buying it and forgot that I had to spend money on games, internet, and other things for it. I ended up shorting myself to the point where I had to sell my old PS4 just to make up for it even though I didn’t want to.
My last piece of advice that I hit on earlier comes from a man who is a big influence in my life who said, “Always pay yourself first.” What does this mean? When you get paid take a percentage for yourself and put it “away”. Whether it goes into a savings account or simply saving up for something you want. If you can still pay for your “needs” this could be an easy way to ensure you can still do things for yourself because you earned it!
Ethan Cole is a student at the University of Missouri School of Journalism