A scary b-word! Most people dislike or even fear the idea of creating a budget. They may be worried about reviewing their expenses and creating a plan around them because they are scared they aren’t saving enough or feel like they may be restricted from living a fun life. Well, I’m here to tell you that it’s just the opposite! I’m sure you’ve heard this before, I don’t want to sound like your parents hounding you about your spending habits… (been there lol) but… budgeting is a habit I’ve practiced since I started college that has actually been super beneficial. Take it from an undergrad girl who loves to treat herself 🙂 Budgeting has given me the freedom to do so and it doesn’t take very long. Here is a brief overview of what my budgeting process looks like.

1. Use a spreadsheet. Putting everything into Excel makes it much easier to track income vs. expenses. The functionality of a spreadsheet allows steps to be dynamic which minimizes work in the long run.
2. Download all of your statements and list out all your expenses. Then categorize them to better understand how exactly you spend your money. 
3. Once you get a sense of how much you spend and on what, create an overall budget that you think is feasible to maintain. Put this on one of the main sheets so you can reference it frequently.
4. Track your expenses and income on a set time-interval. Monthly works for me, but everyone is different. Depending on your goals, you may want to review your finances more or less frequently. The important thing is that you are consistent!
5. Compare your actual finances to your budget. I like to use conditional formatting to help see this difference. Don’t be hard on yourself if you are over budget. Life happens and just remind yourself that you can correct in the future and get back on track! Also remember that your budget is fluid and you can change it if need be.

At first, tracking all of my personal expenses was daunting. I thought it would be time-consuming and stressful to see whether I was over budget. However, once I got into the rhythm, this wasn’t the case. I only spend 30 minutes to an hour each month on my budget and it has allowed me to feel “richer”. Nothing changed in my actual financial health, but being more aware of my finances is empowering. When I spend, I am aware and know that I am in the position to do so. It keeps me accountable and on track. In case you need more persuading, here are three benefits of budgeting:

1. It puts you in a position to spend more and splurge occasionally because you know exactly what you have and what you owe. You know what you’ve allotted yourself to spend so you don’t need to stress when those expenses hit. 
2. It also incentivizes you to save. At least for me, when I have specific numbers I want to hit, I feel challenged to stick to them. You can also look at it like a game. You win if you finish the month in the green 🙂 Then, you can treat yourself if you’d like.
3. You can budget for contributions to different savings accounts or investments. The sooner you start saving, the better due to the idea of compound interest. (Stay tuned for another post about the different types of retirement/savings accounts and investment options.) Starting now will put you ahead in the years to come. Many people wait to save/invest because they think they can’t afford it yet, but creating a budget allows you to allocate money to this.

In the transition to adulthood, budgeting is starting to become increasingly important. I have been lucky to be supported by my parents throughout undergrad, but I will be officially off the payroll in a few months. Scary! But I am confident I will be able to control my finances because I’ve created the habit of budgeting during the last three years. In my opinion, budgeting is liberating and a very achievable thing to do to improve your financial health!

Xoxo,

GabiShae 

*Disclaimer: I am not a financial advisor and am not giving financial advice. These are just the habits I maintain. Everyone’s financial journey is different and there is not a one-size-fits-all approach. I am just sharing my approach to give inspiration to create your own budget how you like 🙂