Budgeting is one of those things that most of us dread doing, but love the rewards! And once you get the hang of it, it’s really not hard at all! It’s all in the planning and remembering that budgeting is not a punishment, it’s a reward.
After all, you need a reason for all this, right? Think about what you are working for – large goals, small goals, short term and long term. Do you want to buy your first car, take a trip with your friends to celebrate your graduation? Maybe you want to make sure you have enough cash when you get to college so you won’t have to work so much. Whatever your goals are, write them down.
Make Sure they are SMART Goals
Once you have your list of goals, go over each one and make sure they fit the model for SMART goals:
S – Specific (instead of “buy a car” try this, more specific goal, “buy a 2010 Honda Accord for $5,000”
M – Measurable (how will you know you have reached the goal, in the example of the car, you will know when you have saved $5,000)
A – Action (what actions will you take to achieve this goal? example, get a job, save birthday money instead of spending…)
R – Realistic (is this something you can realistically achieve on your own without help from others)
T – Time Bound (is there a time set for when this goal will be accomplished? in this example it may be by your 17th birthday)
Figure Out Your Income
Where is your money coming in from? A part-time job, babysitting, mowing lawns or shoveling walks? What about the money you get for gifts on your birthday and holidays? Write it all down.
Start tracking every single penny you spend. Yes, it’s going to be a real pain at first, but you’ll get the hang of it quickly, and bonus – once you start seeing how much you’re spending, you’ll become more conscious and spend less. Candy bars, bottles of water, a song on iTunes, write it all down. Better yet, use an app like mint to help you keep track.
Set the Budget
The first rule of thumb for this is Income = Expenses (there is NO leftoever!) Whatever you take in must go somewhere; Savings, Spending Money, Charity, Transportation (car insurance, gas, vehicle repairs, public transportation…), and whatever else you may be responsible for paying for such as food, clothing, books, etc.
Don’t Borrow and Don’t Lend!
Yes, I know this one may be the hardest yet, but it will be so worth it! Getting in the habit of borrowing money can only get you into trouble, putting you into debt. If you don’t have the money for something, don’t buy it. You may have to do without entirely or you may just have to wait longer to get something. Not only will you appreciate it more, having saved up for it, you’ll realize there are many things that just aren’t worth it. Which brings us to lending money. Many friendships have been lost over money. Make it a steadfast rule with your friends that you NEVER lend money and you won’t ever be put in the position of having to say “no”. It’s your rule, no matter who it is. Period. Save your friends. Save your money.
Celebrate Your Successes!
Make sure you have some mini-goals set up along the way and celebrate them! If you’re saving for a big ticket item, reward yourself for every 10% (or whatever seems appropriate) of the way there. It doesn’t have to cost a lot, or even anything, as long as it’s something that makes you happy.