Creating a budget is the first step to developing a workable spending plan. Your budget will help you manage your expenses and keep you on the right path to achieve your financial goals.

Before you can create a budget, you need to know what you spend in an average month.

Recurring expenses can be fixed or flexible.

Fixed expenses are the same amount every month. They can include:

  • Rent
  • Room and board ,if you live on campus
  • Car loan/Transportation costs
  • Insurance (Auto, Health, Dental, etc.)
  • Cell phone
  • Student loans
  • A gym membership
  • Entertainment subscriptions (netflix, hulu, amazon)
  • Savings goals (a fixed amount that you put into your savings each paycheck)

Flexible expenses change from month to month. They can include:

  • Utility bills
  • Food (including that latte you grab on the way to class or the office)
  • Gas
  • Books, if you are student

Incidentals spent on extras that you don’t need, but enjoy. They can include:

  • Restaurants and bars
  • Concerts

To understand what you are spending on flexible and incidental expenses, it might be helpful to track what you spend each day for a month. Start a log in your smart phone, download a free app, or go old school and carry a small notebook.

Once you know what your expenses are, create a spreadsheet or use a budget worksheet or a tool such as Mint, and enter your resources and expenses.

If your resources are more than your expenses, great! If not, you’ll need to take a hard look at your resources and expenses. Be realistic – it doesn’t make sense to create a financial plan that’s so restrictive you can’t live with it.

Be sure to include a line for emergency expenses, where you set aside a certain amount each month in a separate account in case your computer crashes or your car breaks down. Your goal should be to have less money going out than what is coming in.