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10 Budgeting Tips

Setting and sticking to a monthly budget can give you peace of mind. With a budget in place, you can more effectively manage your money, save for large expenses, and prepare for emergencies. Below are ten budgeting tips.
1. Be Realistic About Your Budget
If you’ve never made a budget before, you need to start by forecasting how much money you’ll have coming in every month and how much you think you’ll be spending. The more realistic you are about each of these numbers, the more likely you’ll be to stick to your budget.
2. Differentiate Between “Needs” And “Wants” In Your Budget
Particularly if money’s tight, differentiating between “needs” and “wants” can help you stay within budget. Needs come first, and if there’s money left over, you can spend on wants.
3a. Guess Low For Income
In your budget, be conservative, and guess low for income. If your income exceeds the amount you factored into your budget, all the better! But you don’t want to be caught short because you were overly optimistic.
3b. Guess High For Expenses
In addition to guessing low for income, guess high for expenses. This, too, will give you some wiggle room when something unexpected crops up or costs rise.
4. Include A Miscellaneous Category In Your Budget
Take all of your expenses and total them. Then, take 10% of that total and put it into a “miscellaneous” category. This adds even more flexibility to your budget, helping to ensure that if you’ve omitted something from your calculations, you won’t go over budget.
5. Include Savings As An “Expense” In Your Budget
Decide on an amount you’d like to save each month, and include it as an “expense” in your budget. Set up a separate savings account and transfer or deposit money into it every month. Your savings can be used for short-term goals (such as a vacation or large-ticket item) or long-term goals (such as college tuition or a house). This money can also be used in case of an emergency, such as a car repair or medical expense.
6. Align Your Budget With Your Goals And Values
Once you’ve completed your budget, study it and see if you’re spending your money in alignment with your values and goals (short-term and long-term). Do this exercise again after you've attempted to live within your budget for a few months. If you are having difficulty adhering to your budget, you may be overspending on things that aren't really aligned with your goals. 
7. Keep All Of Your Bills and Receipts Organized
Organize all of your bills and receipts by category (e.g. housing, utilities, car expenses, loans) and file them each month in a folder or an accordion file. This will make it easy to retrieve information if you need to dispute a bill or track your spending history. Organizing your bills and receipts as you go along also makes it simple to file your taxes at the end of the year.
8. Review And Recalculate Your Budget
A review of your budget every month can help you stay on track with your finances. In essence, a budget is a forecast of what will happen; take the time to go back and recount what actually did happen. Where did you overspend? Where did you save? What can you do differently next month? While it’s important to review your budget every month, you’ll also probably need to re-calculate your budget every 3-6 months, or whenever something changes dramatically in your financial life.
9. Pay Cash For Small Expenses
Give yourself a daily, weekly, or monthly allotment of cash, and use it whenever you can. Every time you pay cash, you’ll be more conscious of what you’re spending than if you paid by credit card, check, or online withdrawal.
10. Forgive Yourself For Small Transgressions
It’s almost impossible to follow a budget 100% of the time. No matter how disciplined you are, you may overspend now and again. Forgive yourself for small errors and get right back on track, as soon as possible.
See these related budgeting articles:
Sticking to a Budget: A Primer For College Students
How To Make A Budget: A Primer For College Students
Click here for a budget worksheet for college students.

©2012, Money 101. Money 101 is a free program from the Colorado Department of Higher Education.  We provide financial literacy resources and tools, including online courses, articles, calculators, videos, and  budgeting worksheets for high school and college students.

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