Financial Wellness Article Series: Budget is Not a Dirty Word

April 27, 2018

A budget is nothing more than a written plan as to how you are going to spend your money for a set period of time. Research shows that people are better at managing their money if they plan for their income and expenditures. It is easy to spend money on discretionary items before you pay your bills. Often, that leaves you short for the month.

First, set goals for your money. If you are a full-time student, your goal may just be to have money to get through the month. So how do you know how much you need? This leads to the second point.

Second, make a budget. A budget is merely a plan as to what money is coming in and how that is to be expended. It is only as restrictive as the money you bring in and the expenditures you make going out. So, a budget = how you are going to manage your money this month. If you know you have rent, utilities, food, and car insurance of $600, then you know that you must bring in $600. Conversely, if you know your wages are $500, you need to figure out how to live on that $500 next month or how to make some extra money. In addition, plan to put money aside each month to build an emergency fund (see 5 below). Just list the income you expect and the expenditures for the period and see what is left. This will give you an idea of what you need to do for the month—put money in savings or do some cutting of expenditures. There are budget examples that you can use on the Financial Wellness website or you can use an app such as Mint to prepare and track your budget.*

Third, plan for those expenditures and income that don’t occur every month but will come in the future. If you have car insurance for six months due on June 1, then you need to put money aside each month to pay for that. Or, you need to figure out in advance what money you can bring in to pay that expense.

Fourth, you need to compare your actual expenditures to your budget. If you said that you would only spend $200 on groceries, but you actually spent $180, maybe you can cut your food budget back a bit. Or, if you went out to eat and overspent your food budget, you either need to cut that expenditure next month or increase your food budget by cutting something else. If your actual utility expenses are less than you budgeted, you need to put that extra money aside for the months that it will be over your budget.

Fifth, as soon as you can, put money aside for an emergency fund. This is for the breakdown of your car, doctor bill, or some other emergency expenditure that would throw your budget out of whack. While you are in school, $500 to $1,000 in a savings account would bring some peace of mind. Later, you should put three to six months of expenses in that account.

Remember, this applies not only to your personal life but to any organization that you manage, including your church. **Shannon Crow, Financial Wellness Program Coordinator in Room 112, is available to help you with your budget for questions or help with your situation.
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