College graduates, do you know how to make a budget? Now that you’re out of school and in the real world, it’s time to manage your own money and create a budget to help you pay for expenses and add to your savings. Plan out a budget before you spend your money so you’ll have enough to cover your needs while still having some left over for doing what you want. The 50/30/20 budget is a commonly used model:
Set aside 50 percent of your monthly income for your required expenses, including rent, car payments, insurance, food, cell phone expenses, and utilities.
The next 30 percent can go towards your fun expenses like shopping trips, eating out with friends, and vacations.
Finally, the remaining 20 percent of your monthly income should be used for repaying debts and investing in a savings account.
Now that you know how to divide your monthly income, you have to actually follow your budget. Here are three tips to help you be a smart spender:
1. Don’t use a credit card for everyday purchases. Everyone needs to use credit once in a while for large purchases, but using your credit card for a $5 convenience store expense is dangerous. Small purchases over time can add up, and there are high interest charges if you spend more than you can cover that month.
2. Become a savvy shopper. Now is the time to utilize coupon websites and sales at grocery and retail stores. If you are in need of a new pair of work shoes, resist the temptation to buy a pair immediately. Instead, wait for your favorite store to run a sale or sign up for their email list for monthly coupons.
3. Don’t forget your long-term goals. Keep a reminder of your long-term goals posted on your fridge, nightstand, or bathroom mirror. Of you have a constant reminder of why you are saving — like a picture of that new convertible you want or a travel itinerary – you will be less likely to splurge.
Saving money can be a tough task especially if you have never had to budget before. However, if you concentrate on reducing credit card use, being a savvy shopper, and keeping long-term goals in mind, you can stick to your budget without giving up the fun extras.