Budgeting

Borrowing $10 or $20 from friends and relatives for movies and dinner with friends will now turn into borrowing thousands from banks for student loans, car loans, mortgages, and so forth. Although friends and family may be flexible with when and if you pay them back, banks most definitely will not be as flexible. Furthermore, banks will charge you extra for late payments on top of the interest you already accrue. Make budgeting a priority and stick to the plan. Late payments will ruin your credit, making it difficult to get loans for cars, houses, or other items.

How To Budget

Figure out your budget based on net pay. Then, separate your expenses into three different categories: fixed, variable, and one-time expenses.

Fixed Expenses - Bills that stay the same month-to-month

• Rent/mortgage
• Student loans
• Car loan
• Insurance
• Transportation costs
• Credit card minimum payments, etc.

Variable Expenses - Spending that fluctuates each month

• Food
• Entertainment/nightlife
• Health club
• Hobbies
• Gifts
• Dry cleaning, etc.

One-Time Expenses - Events, emergencies, etc.

• Vacations
• Large purchases, such as a television, stereo, or refrigerator
• Car maintenance, etc.

With online banking, it’s easy to monitor your spending. Search back the past couple of months and plug into which categories your spending fell. Set up a spreadsheet to monitor your spending and budget or use a software program.