Basic budgeting principles such as saving as much money as you can and never spending more than you earn are critical to your financial health. And college is the perfect time to learn about these concepts.

Budget benefits

Making a budget and following through with it is part of being a responsible college student. It may seem mundane, but don’t underestimate how important it is to your success in life.

Disciplining yourself financially now will lead to more prosperity in your future. Students who scoff at the idea usually go on to make classic financial mistakes. Those mistakes can take years to fix — leaving you on the wrong side of the track before even getting your adult life started.

Creating a budget

The first step is to create a personal budget that allows you to quickly and easily see your financial information. This will include how much you spend, how much you earn, what your profit or loss is, and how much more you need to earn to turn a loss into a profit.

It doesn’t take much time either, so start today with a piece of paper and a pencil. Sit down and write out this information so you can see it clearly. Set personal budget goals and keep track of them on paper. These goals can get lost in our heads sometimes as we balance homework and social responsibilities, so having a written list helps.

Income and expense

Before you can have a budget, you need an income. The first step to creating a personal budget is to write down that estimated income for the next year and then divide by 12 to find your monthly allowance.

The income might come from a job, internship, gifts or money from your parents. Whatever the source, track it to the penny to maximize your savings and minimize your spending.

Next to your income, write down your expenses. These can include costs for rent, car payments, Internet bills and food. Subtract your expenses from your budget to find out what you have left for saving and other spending. Keep this number in mind as you shop for new clothes, books or other entertainment.

Be aware that a budget will change as your life does, so regular updating is crucial. To keep your budget in check, differentiate between your “needs” and “wants.” Food and shelter should always outweigh discretionary “wants” that can take major hits out of your income.

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