Budget. For many people, just saying the word is stressful. How do you make a budget? How do you follow one? Budgeting can be especially difficult for teens and young adults, whose monthly incomes often vary. Knowing how budgets work is absolutely critical for developing good financial habits.
Budgeting is not about constantly saying “no” every time you want to buy something. Rather, it's putting yourself in control – tracking your spending, setting goals and reaching them. Your budget ensures you always have enough for the things you need and are important to you. Following a budget can keep you out of debt, and it can help get you out of debt if you owe money.
There are numerous ways to learn how to create a basic budget, and there are plenty of websites that can help. Here’s some advice from Origin experts to help you get started.
Begin with the money you have. List everything you might have in a bank account or saved from birthdays, holidays or other special occasions. List any regular income from an allowance or after-school jobs.
Next, list all your expenses – everything you buy each month. Include food, entertainment, clothes, school supplies or club dues, and any bills you’re responsible for paying.
Total the items on each list. This will give you an idea of how much money you have coming in and going out.
Now go back to the list of expenses and prioritize them. Which items must be paid each month and which are not necessarily required? Subtract the required items from your income to see how much is left.
This is the really important number because it helps determine how much you have left over to spend on things like movies or music. It also helps when deciding how much you want to put aside each month in savings.
Keep a list in a notebook or create a simple spreadsheet, and spend a few minutes each month updating your income, spending, and savings. As you watch your savings grow over time, pat yourself on the back for the progress you’ve made and the control you have over your money.
Origin Bank has a free Personal Financial Management Tool built into our online banking and mobile app. It makes creating and managing a budget fast and simple with features that help you track your progress automatically.
At Origin, we believe it’s never too early to build good money management skills. With a solid foundation, kids and young adults develop the knowledge and financial habits that help them become independent adults and avoid common mistakes that can lead to long-term struggles.