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:
        • Rent/Mortgage
        • Car Payment/Lease
        • Cell Phone
        • Cable/Internet
      • Examples of variable expenses:
        • Utilities
        • Groceries
        • Gas/Transportation
        • Credit Card

Step Three: Actual Expenses

Review all expenses in previous month and record the actual amounts within each expense category.

  • Remember to review all methods of payment:
    • Debit Card Transactions
    • Credit Card Transactions
    • Venmo Payments
    • Cash Purchases
    • Checks
  • 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 strategies.
    • Example: You overspend on food...
      • Purchasing Starbucks or Dunkin Donuts is more convenient than making coffee and breakfast at home.
      • 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?
    • Cable/Internet?
    • 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 and...
    • 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%.
    • Example...
      • 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!

Moving Forward

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 months:
      • 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.