10 tips & tricks to creating a successful budget from UM’s Financial Education Program
The UM Financial Education Program helps students, employees, and alumni navigate financial topics including financial aid, student loans, and credit. Here they share some tips on a critical topic for every house hunter, renter, or home buyer: budgets.
10 tips & tricks to creating a successful budget
When first creating a budget, it can be stressful. It can take time to figure out a budget that works the best for you. It could be writing it down on a piece of paper each month, using an Excel spreadsheet or simply using a budgeting app on your phone. Here are 10 simple tips and tricks to help you get started on budgeting and sticking with it.
- Set your goals before learning how to budget your money. Before you start your budget, it is important to have goals in mind for what you’re saving for. Are you saving for a new car? A vacation or trip? How about a house? Having these goals in place and checking them often will help remind you of what you are saving and budgeting for.
- Create a routine. It’s important to create a routine to manage your money. Finding that routine might be simply managing it on a regular basis, daily or weekly. It’s essential to record your expenses and income regularly. Waiting longer than two weeks to record information, you may forget some transactions as well as having the possibility of entering quite a bit of information at one time.
- Make your financial aid credit balance refund last. If you have leftover financial aid after using it to pay for your tuition and fees, you will receive a refund of the remainder of your financial aid. Use that for other education-related expenses (like textbooks, transportation, and food). Make sure to make that refund stretches over the whole semester or term instead of spending it all as soon as you receive it.
- Review your spending for little items that add up to big monthly expenditures. The daily cup of coffee will add up. Instead of purchasing lunch every day, try packing your lunch. Spending roughly $10 a day eating out during the week translates to $50 a week and $200 a month. Think about how much you would be saving by just packing your lunch. Other ways to save even more would be different forms of transportation and entertainment expenses.
- Use credit cards wisely. Think very carefully before you decide to get your first credit card. Is a credit card really necessary, or would another payment option work just as well? If you receive a credit card offer in the mail, don’t feel obligated to accept it. Limit the number of cards you get.
- Consider going off of credit. Consider getting rid of your cards. Put them in ice, cut them up, hide them somewhere, take them out of your wallet — anything you need to do to stop using them. Not only does it feel great to get your credit card balance down to zero, but once it’s down to zero, you are not paying more for your purchases due to interest. Use your debit cards and cash instead.
- Don’t spend more on your credit card than you can afford to pay in full on a monthly basis. Responsible use of credit cards can be a shopping convenience and help you establish a solid credit rating and avoid financial problems. Signing up for balance notices, billing statement notifications, and electronic payment reminders from your credit card provider and adding a spending limit will help you avoid overspending when using a credit card.
- Create a “Miscellaneous” category. We are only human. We might not remember everything, like family birthdays and anniversaries. You might be surprised when these things pop up, but your wallet doesn’t have to be. Create a “Miscellaneous “category with about $50 or so in your budget. When these little things that slip your mind, your budget already has them worked in.
- Save for big purchases a little at a time. Be prepared for new tires by being watchful of the treads on all the wheels. Save up for Christmas all year long since you know it’s coming December 25. A great way to be prepared for these big purchases is to save a little each month for them. Set up a category in your budget so that each month roughly $50 is added to it.
- Include a category for fun. There’s no point in budgeting if you don’t budget for the things you enjoy. Budget for things like going to the movies, dining out, grabbing drinks with friends, and anything else you like to do. With this category, it is important to stick to the amount you’ve allocated. Don’t go over this amount, you’ll be cheating yourself out of the control your budget had given you.