Maintaining a Balanced Budget
Tracking Your Expenses
Tracking the amount of money spent on expenses is essential to keeping a balanced budget. Tracking can seem daunting, but don’t let this be what stops you from financial freedom. There are many methods to tracking your expenses. Once a system is created and habits are developed, this task will be as easy as brushing your teeth and buckling your seatbelt.
Read more about the tracking methods and pick one that works best for you.
Reduce Spending
There are many reasons to reduce spending. It could be that it's the end of the budgeting cycle and there wasn’t enough money for gas to get home. It could be that more money is needed to go towards your financial goals or you hit something in the road and now your tire has to be replaced. Regardless of the reason, it can be difficult to decide where to cut costs and how much you are actually willing to reduce within certain categories.
For example, reducing how much your spend on books is easy if you are purchasing brand new books every semester. As an alternative, you can rent books online or purchase used books and then sell them back. However, if you have already cut those costs, you may need to look in another category.
Depending on the category, this can be a struggle. Many times the money where we need to spend less isn’t necessarily where we want to spend less. Those terms can be difficult to define. A need is something that is required to survive like food, water, clothing, etc. A want is something that is not needed to survive but more of a nice to have (cable/satellite TV, internet, smartphones, etc.) and the lines can begin to become blurry.
Here are a couple of other great examples. We all need shoes. However, do we need $150 shoes? And how many pairs? We have to eat, that’s a fact, but do you need to eat out every night? This process can require a real discussion with yourself about needs and wants.
The Step Down Spending Method can help you through this process.
Borrowing Less
This can be a real struggle for students. It's hard to believe it is possible to save money while borrowing loans to pay for college expenses. But if you are questioning whether or not to save, the answer is YES, you can!
Every year, students accept student loans necessary to cover expenses. The less expenses needed, the less money needs to be borrowed. Use the Step-Down Spending Method and save as much money as you can from what you have already borrowed. When it is time to accept additional loans, apply the money saved and accept less. The less money you borrow, the less money that has to be repaid. That is saving!
For more assistance on planning out how much to borrow for your education, go to the Individual Borrower Plan (IBP).
