5.1: Basic Budgeting
Budgeting is an important step in managing your money and spending habits. To create a budget you need to identify how much money you are spending. Some expenses to keep in mind when creating a budget are rent, car payment, fuel, auto insurance, utilities, groceries, cell phone, personal, gym membership, entertainment, gifts, dining out, medical expenses, etc.
There are several apps out there that can help you budget your money. Just a few examples are Mint, Manilla, and Check. These are all free apps that help you keep track of bills and your accounts. Your bank also keeps track of your spending and what categories each item falls under. Log into your bank account online and look for “Track Spending” or a similar item. Many banks give you a pie chart showing you how much you spent in each category in the last month. You can edit your categories, change the number of months, and sometimes even set a budget goal.
Table \(\PageIndex{1}\): Example of Budget in Excel
When you are creating a monthly budget, many experts say if you want to have control of your money, you should know where every dollar is going. In order to keep track of this, a written budget is essential. Below is one example of a budget in Excel. This was a free template from the “Life After College” blog. There are hundreds of free templates out there so you should find the template that suits you the best – or create your own Excel budget!
(“Four-Step Budget Template,” n.d.)
You make $32,000 a year and want to save 10% of your income every year. How much should you put into savings every month?
Solution
\[$32,000 \cdot 0.10 = $3200 \nonumber \]
You want to save $3200 a year.
\[\dfrac{$3200}{12} = $266.67 \nonumber \]
You should be saving $266.67 a month or $133.33 a paycheck if you are paid biweekly.