MCC

Managing Your Money

*Content for this section courtesy of Oklahoma College Assistance Program, Oklahoma Money Matters program through the Oklahoma State Regents for Higher Education.

Setting Up a Budget

Looking for the secret to financial success? The answer is the same whether you have $50 in your pocket or $5 million. Set up a budget.

BUT, you say...

  • “Budgets are boring.”
  • “They’re restrictive.”
  • “I don’t have many bills so I don’t need one.”

Budgets may not thrill you, but having more money probably will. A budget is simply spending your money on paper. Financial experts have lots of advice about how you should spend your money but the only thing a budget will tell you is where you actually spend your money. Whether or not to make changes to your spending habits is still up to you. A budget allows you to see at a glance where your money is going, no matter how much or how little you have.

Getting Started

Identify your Income
Add up your paystubs, tips and yes, even money from your parents to determine how much income you bring in each month.

Evaluate your Expenses
There are two types of expenses: the easy ones and the hard ones.  Easy expenses (fixed) don’t change month to month, like your rent. Your landlord will never come over to tell you that you’ve used your apartment a lot this month so you owe more money.   You’ll always know, down to the penny, what you owe on fixed expenses.

The hard expenses (variable) are the ones that change every month, like gas, utilities and food. These are harder to plan for because you never know when gas prices will change or how many times you’ll eat out in a week. To help you with the hard expenses, you need to track your spending. You’ll want about a three month average, so for the next three months, write down everything you spend. Yes, even that pack of gum you bought at the store and the soda you paid for at the vending machine.

Create Categories
As you track your spending, you’ll identify patterns. Use these to create budget categories. Some will be obvious, like food, rent and utilities. Others will be very specific to you, like those trips to the vending machine or the coffee shop. You can download a budget template but remember, customizing your budget is very important so be sure to make your categories fit you.

Save a Spot for Saving
Remember those types of expenses we mentioned: easy and hard? Well, there’s one more type of expense: Unexpected. A budget helps us plan for expected expenses but what happens when your car breaks down, you have an unexpected illness or you get a parking ticket? Make savings into a category on your budget and you won’t have to panic when you have a sudden, unexpected expense.  Even if you can only afford to put in $10 a paycheck, an emergency fund can help you avoid busting your budget.

Once you build up an emergency fund, then you can start working on short and long term savings goals. Short term savings goals could be a vacation or concert tickets. Long term savings allows you to build wealth, invest and eventually retire.

Budgeting Alternatives

A spreadsheet isn’t the only way to approach budgeting. Consider these twists on a classic budget and don’t be afraid to try several methods to find what works for you.

Budget Buckets
This method relies heavily on online banking and it’s best if you have a good history of maintaining your bank accounts. You’ll need three bank accounts - two checking and one savings. First, decide how much of every paycheck you want to put toward savings and have that automatically sent to your savings account.

Via direct deposit, send the rest of your paycheck to checking account No. 1. From this account, you’ll pay all monthly fixed expenses, like rent, car payments and utilities. With the money left over after paying your fixed expenses, divide by four and set up a weekly automatic transfer of that amount to checking account No. 2. Use this account for all variable expenses like groceries, entertainment, clothes and eating out. Refrain from transferring more money over or using credit cards!

Envelope Budgeting
Grab some envelopes and write the name of each category in your spending plan on a separate envelope. Then, place the monthly amount of cash you plan to spend on that category inside. Forget your checks and plastic cards, use these envelopes instead. Once the cash in each envelope is gone, there’s no more spending until next month! One word of caution - be careful if you implement this plan. If your cash gets lost or stolen, there’s no replacing your  money. Invest in a lockbox and keep your cash protected at all times.

Online BudgetingCameron students
Are you tech savvy? There are many online budgeting tools and software tools to help you keep track of your spending.  Many options will import data directly from your bank, while others require that you input your spending information.  Either way, always take extra precautions to protect your information. Here are a few places to check out:

Getting Through College on Less

Do you have T-bone taste on a ramen noodle budget? With a little bit of effort and creativity, you can pay your bills, have fun and save for the future without breaking your bank account. By cutting corners and making small changes, living within your budget can be easy.  Check out some common budget busters to learn how to combat them before they take over.

Food
A person has to eat, but if you’re not careful, it’s easy to go over budget in this category. If you live on campus and have a meal plan, use it. You’ve already paid for it, so you’re throwing money away if you don’t take advantage of it. If you have a refrigerator in your dorm room, stock it with inexpensive snacks instead of visiting the vending machine. When grocery shopping, look for coupons on things you regularly use and shop at discount retailers. When eating out, bring a friend and take advantage of two-for-one deals or split an entrée.

Transportation
You’ve got to get from point A to point B, right? If you have a car, remember to consider things that aren’t regular expenses, like tune-ups and new tires. Stash a little money each month so you’ll be able to cover these expenses when they pop up. Don’t forget about gas! When filling up, comparison shop for the best quality and lowest price. It’s important to stay on top of regular maintenance, like oil changes and tire rotation. Following the manufacturer’s recommended maintenance schedule will lengthen the life of your car.

Entertainment
All work and no play makes for one unhappy student. Forgetting to budget for fun is why some people don’t stick to their budget. When boredom strikes, look for free entertainment like movie nights on campus, concerts or community events and festivals.

Furnishings
One man’s trash is another man’s treasure. When decorating your humble abode, check out thrift stores, consignment shops, online sites (like Craigslist), the classifieds and garage sales to get good stuff at a cheap price. If you’ll be living with a roommate, check out what they have and shop accordingly. There’s no need to show up on move-in day with duplicates of everything.

Clothes
If you’re a fashionista, but your clothing budget leaves you feeling blah, look for cheaper alternatives than the mall. Consignment stores often have name brand items, sometimes with original tags still attached. Host a clothing swap with your friends. The things they’re tired of wearing may be just what you’ve had your eye on. If you must make a trip to the mall to scratch your retail therapy itch, never pay full price. Eventually everything goes on sale, so practice patience and wait it out.