Updated content on 6/16/23
Budgeting is an important aspect of personal finance. Regardless of your income, knowing where your money is going and saving for the future are essential, and creating a budget can help you be most effective. East Ohio College shares our budgeting tips to help you create a budget that works for you.
Continue reading to learn more about why budgeting matters!
What Is A Budget?
A budget is a guide to how much money you are bringing in versus the amount you are spending and the items you spend money on for a given amount of time. When creating a budget, it can be helpful to start budgeting for one pay cycle or a month at a time.
How To Create A Budget
When creating your first budget, list your income and expenses for the time period you’re budgeting for. Then, when adding up your income, be sure to use your after-tax income for the most accurate amount.
Making a list of your expenses can seem intimidating. A tip for this could be to look at your past bank statements to see which bills come out and when. Some expenses you will want to track could include:
- Housing – Rent, Mortgage
- Utilities – Gas, Electricity, Water
- Transportation – Car payment, Gas, Insurance, Public Transit
- Loans – Student loans, Credit card bills, Personal loans
- Amenities – Internet, Phone bill, Monthly Subscriptions
- Necessities – Food, Pet food, Household products, Clothes
- Miscellaneous – Random expenses, Activities
Credit.org recommends using the 50/30/20 budgeting method, separating your expenses into three categories: Necessary, Discretionary, and Lifestyle. Using a free downloadable worksheet, you can list your expenses in these categories, allowing you to see what spending is most important and what you may be able to eliminate.
How To Keep Up With Your Budget
Once you have created your monthly budget and are ready to begin using it, you will need to keep track of your actual spending to ensure you are staying on budget and determine if anything needs to be adjusted.
A few ways to do this include looking at your bank statements and manually adding everything up or using free online software like Mint to track your spending.
Once you have decided on your preferred method, compare your actual spending to your budget goals for each category to determine if you need to adjust your budget. For example, suppose you are spending more on food than expected. In that case, you may need to adjust a different category in your budget to accommodate this. Remember that your budget is supposed to work for you, not the other way around, so you can adjust your budget to fit your individual needs at any time.
Why Is Budgeting Important?
Budgeting can allow you to have more financial freedom because you will know exactly how much of your income you have to spend on your necessary expenses and what you will have left over.
Budgeting can also help you save money for your short-term and long-term goals. For example, suppose you have a significant goal, such as purchasing a new car or house. In that case, you can work a monthly savings goal into your budget to help you achieve your goal. Think of the amount you are saving as a bill you are paying to your future self!
Get On The Path To A Better Future!
With your budget in place, you can be in a better position to invest in your future. If you see yourself in a new career, East Ohio College is here to help you get on the path to a brighter future!
Get started today by contacting our admissions team by calling 330-385-1070 or Requesting Information.