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Budgeting and Savings
Creating a Budget
Living expenses can be quite different once you have left school and joined the work force. The benefits of an increased income and a full time job come with an increase in expenses. Knowing how to create and balance a personal budget can help alleviate some of the stress of trying to manage your financial life.
Here are some basic steps to help you create your own budget:
- Estimate your income – This should be a realistic estimate; not what you think you ought to be earning. If you haven’t secured a job yet and need some guidance, the Occupational Outlook Handbook has salary estimates for virtually every job as well as industry and profession forecasts. http://www.bls.gov/oco/. Subtract taxes from your total income to reveal your disposable income.
- Calculate your expenses – This includes essential (rent, food, electricity) and non-essential (clothes, restaurants, movies) expenses. Some of these expenses are fixed costs, like rent or a monthly loan payment, while others may fluctuate over time.
- Income – Expenses = Discretionary Income. Discretionary income is the money leftover when all expenses have been removed from the picture. It may be helpful to make this calculation with very few non-essential expense first, in order to determine a reasonable budget for non-essential purchases. How you choose to save or spend this discretionary income is up to you (–check out the Savings section below….)
Most resources suggest that a monthly budget is just as important, if not more so, than an annual budget. There are many tools on the web that offer budgeting worksheets or will help you set up and calculate your budget. www.Mint.com is a comprehensive budgeting tool that is easy to use –and there’s an app for it too! It is a free service that links your bank accounts, credit cards, loans, investments and property to give you a clear picture of where you stand financially. There are tools to help you create and stick to a budget, encourage saving and track investments.
Here are some other helpful articles and tips for budgeting:
It’s exciting when those paychecks start rolling in! But, keep in mind the importance of saving for the future— and creating a safety net for a rainy day.
While cutting back from excess purchases might be the most obvious way to save, cutting costs on regular purchases is another way to save money in places where you might not have expected. Websites like Billshrink.com help you find ways to save money on your regular bills and payments – gas, cell phone, television etc.
Whether you are a banking pro or new to managing your own finances, the following resources can help you make the smartest decisions when it comes to your hard earned money
- SavingsAccount.com allows you to compare interest rates for savings accounts and CD’s from different banks nationwide.
- MyMoney.gov is a government website dedicated to educating the public about all forms of money matter. Check out this guide for young adults, new employee saving tips and information on savings bonds.
- Learn to Save Like a Pro
- SavingAdvice.com has discussion forums and articles pertaining to saving and investment. Visit the Tools section for coupon and freebie resources as well as savings calculators.
- 10 Things Anyone Can Do To Save Money