As you create and maintain your budget, you’ll want to keep some important tips and suggestions in mind.

Get Started
Differentiate Between Needs and Wants
Manage Your Budget
Expect the Unexpected

Get Started

Here are some important points to keep in mind as you build your budget and identify what goes into your income and expenses.

• Overestimate your expenses. It’s better to overestimate your expenses and then underspend and end up with a surplus.
• Underestimate your income. It’s better to end up with an unexpected cash surplus rather than a budget shortfall.
• Involve your family in the budget planning process. Determine how much income will be available from family sources such as parents or your spouse. Discuss how financial decisions will be made.
• Prepare for the unexpected by setting saving goals to build your emergency fund. Budgeting will help you cover unusual expenses and plan for changes that may happen while you’re in school.
  • Planning to move off campus? Short-term budgeting goals for the year can include saving for the rent deposit and furniture for your new apartment.
  • Starting an internship next semester? Adjust your budget to save for buying new clothes to wear to work and paying increased transportation costs.
  • Finishing school in the next year? Budget to include job search expenses such as résumé preparation, travel to interviews and job fairs, and professional exam fees. Also, you may need to think about how you will manage your money between leaving school and finding a job—this is a time when an emergency fund can really help out.

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Differentiate Between Needs and Wants

One benefit of budgeting is that it helps you determine if you have the resources to spend on items that you want versus those you need.

• Start by making a list of things you’d like to save up for.
• Identify whether each item on the list is something you absolutely need or is really a want.
• If you decide you want something, ask yourself if you will still be happy you bought the item in a month.
• Next, prioritize each item on the list.
• Once you have set your priorities, you can then determine whether you should incorporate each item into your budget.

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Manage Your Budget

Keeping track of all of your spending may seem like a lot of work. But if you’re organized, keep good records, and use some of the following tips, you’ll find it’s easier than you may think. And, don’t be too hard on yourself if you slip up.

• Record your actual expenses. Have you noticed how fast your cash disappears? To get a handle on where you cash is going, carry a small notebook or use a phone app to record even the smallest expenditures such as coffee, movie tickets, snacks, and parking. Some expenses that are often ignored include music downloads, charges for extra cell phone usage, and entertainment expenses. Search for an online tool to assist you—many are free!
• Organize your records. Decide what system you’re going to use to track and organize your financial information. There are mobile apps and computer-based programs that work well, but you can also track your spending using a pencil and paper. Be sure to be consistent and organized, and designate a space to store all your financial information. Good record-keeping saves money and time!
• Create a routine. Manage your money on a regular basis, and record your expenses and income regularly. If you find that you can’t record your expenses every day, then record them weekly. If you wait longer than two weeks to record information, you may forget some transactions and be overwhelmed by the amount of information you need to enter.
• Include a category in your budget called “Unusual.” There will be some expenses every month that won’t fall neatly into one category or that you couldn’t have planned for. An “Unusual” category will help you budget for these occasional expenses.
• Review your spending for little items that add up to big monthly expenditures. The daily cup of coffee and soda at a vending machine will add up. Consider packing your lunch rather than eating out every day. Spending $10 a day eating out during the week translates to $50 a week and $200 a month. A $5 packed lunch translates into a savings of $1,200 a year. Save even more by looking for ways to manage and reduce your transportation and entertainment expenses.
• Make your financial aid credit balance refund last. If your school applies your financial aid to your tuition and fees and there’s money left over, the school will refund that money to you so you can use it for other education-related expenses (textbooks, transportation, food, etc.). Remember that your financial aid is supposed to help you cover your cost of attendance for the whole semester or term, so be sure to make that refund stretch over time rather than spending it all as soon as you get it.
• Comparison shop. Comparison shopping is simply using common sense to compare products in an attempt to get the best prices and best value. This means doing a little research before running out to buy something, especially when it comes to more expensive items. Make the most of tools like phone apps for comparing prices and value.
• 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.
• 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. Consider signing up for electronic payment reminders, balance notices, and billing statement notifications from your credit card provider.

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Expect the Unexpected

Your emergency fund should be used for expenses that fall outside the categories of annual and periodic bills. Unexpected expenses are the result of life events such as job loss, illness, or car repairs. Redefine your notion of "unexpected" bills to encompass these unforeseen events rather than more common but infrequent expenses. The good news is that if you do not use your emergency fund, you will have savings—which should always be a priority when managing your finances. And, if you have to use your emergency fund, you may avoid unnecessary borrowing.

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