One of the biggest challenges that teens and college students face with their finances is budgeting. The word budgeting can seem like a time consuming and complex task; however, creating a budget can be simple and save time and money in the long run. Start budgeting your money by following Money MindEd’s three easy steps to creating a monthly budget.
Step One: The first step to creating your budget is determining your monthly income and expenses. Try keeping a money diary for a month. Record you’re income, money earned, such as a part time job, allowance, or gift money and your expenses, money spent or set aside for saving. At the end add up your entries to determine your monthly income and expenses.
Step Two: Next take a look at your money diary and determine what expenses are required, things that you must pay. These expenses may include the gas money you use to drive to school or work and your cell phone bill. You should also include savings as a required expense in order to help build your savings. It is crucial to get in the habit of paying yourself first whether you are saving for the future or something specific.
Step Three: Once you have paid your required expenses you can use the left over money for the month to reward yourself. This money is your discretionary income that can be used for shopping, entertainment, or eating out with friends. Once you have determined your discretionary income it may be smart to budget how much you will spend on certain activities so that it lasts throughout the month.
