Drafting a budget is one of the most important steps to managing your financial wellness.
Making a Budget
Use our Budget Worksheet (PDF) to follow along with the below steps...
Step One: Identify Income
Define the "your" in your budget.
Think about income first.
- Who/what contributes to your income?
- List monthly income and name sources.
- Is the income steady/predictable?
Step Two: Estimate Expenses
Define the "your" in your budget.
Think about expenses next.
- Who contributes to your expenses?
- Just you? Spouse? Children? Sending money to family?
- List estimated amounts of monthly expenses in categories and name who expense is for.
- Is the expense fixed or variable?
- Examples of fixed expenses:
- Car Payment/Lease
- Cell Phone
- Examples of variable expenses:
- Credit Card
Step Three: Actual Expenses
Review all expenses in previous month and record the actual amounts within each expense
- Remember to review all methods of payment:
- Debit Card Transactions
- Credit Card Transactions
- Venmo Payments
- Cash Purchases
- Compare your estimated expenses (Step Two) to your actual expenses.
- Were there any major differences or surprises?
- Where did you spend more than you expected?
- Where do you spend less than you expected?
Step Four: Identify Potential Problems
Start identifying potential budgeting problems
- Do you have enough income to cover your expenses?
- Where do you overspend?
- What are your weaknesses?
Step Five: Set Goals
- Be realistic to identify your overspending & weaknesses and address them with specific
- Example: You overspend on food...
- Purchasing Starbucks or Dunkin Donuts is more convenient than making coffee and breakfast
- Potential Strategy: Only use cash at fast-food locations. Set aside monthly amount
you are allowed to spend at fast food locations. Once you have spent that allotment,
you are done for the month.
- What would you buy if you had more money?
- Where do you see yourself financially in five years? Twenty? Fifty?
- What healthy financial practices do you admire?
Step Six: Identify Solutions
- Reduce your fixed expenses:
- Can you move into cheaper housing? Can you add a roommate?
- Can you enroll in a cheaper cell phone plan or change providers?
- Car insurance?
- Can you eliminate any subscriptions or memberships?
- Reduce your variable expenses:
- Take Control
What is your spending costing you?
- Consider the differences between buying something that loses its full value immediately
- Planning for an emergency.
- Paying down or paying off a debt (reducing interest accrual).
- Borrowing less (reducing interest accrual).
- Student Loan Overborrowing
- Review current student loan interest rates on our federal student loans webpage.
- Example... Spending $200 less per month and reducing your Graduate PLUS loan borrowing
by that amount over a four year program will reduce your total loan debt over $8,400
and eliminate about $1,200 of interest accrual!
- Credit Cards
- Minimum balance due is typically 2% of balance.
- APR is typically between 15-24%.
- You have a credit card balance of $2,000 at 18% APR ($360 interest cost per year).
- Minimum balance owed is $40 per month.
- If you pay only the minimum balance, it will take you 93 months (nearly 8 years!)
to pay off the balance! You will pay $1,725 in interest over that time-- that means
you'll pay 86% in interest overall!
As you move forward, track and adjust your budget each month.
- Try to predict upcoming expenses and prepare.
- When living primarily off of a student loan refund, planning out your expenses is not optional.
- Visit our Disbursements & Refunds webpage to view estimated disbursement & refund dates each term.
- Visit our Budgeting Worksheets webpage to plan your loan amounts and expected refund amounts.
- Remember your refund amount each term should be budgeted to last you for about three
- Summer = June, July, August
- Fall = September, October, November
- Winter = December, January, February
- Spring = March, April, May
- If you find yourself spending less than expected and have more refund funds than you
need, contact your respective financial aid office...
- You can reduce upcoming loan disbursements anytime before the disbursement date (usually
the start of classes each term).
- You can return student loan funding as well. Any payments made on a Federal Student
Loan that disbursed less than 120 days ago will be directed toward the principal balance
and counted as a cancellation of the loan.
Schedule an Appointment
If you want help preparing and tracking a budget, budgeting coaching is available
from the Debt Management Counselor. Make an appointment with Grace Taylor by visiting www.calendly.com/graceta.