Using a Budget to Plan

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Planning and creating a budget is one of the best ways to be in control of your personal finances. There are 8 important steps in creating a successful budget to balance your income and your expenses. The number one rule when it comes to a budget however is YOUR EXPENSES MUST NEVER EXCEED YOUR INCOME !

When it comes to creating a budget, the main things you focus on are your fixed expenses and your flexible expenses. Fixed expenses are necessities which are easy to determine like rent and loan payments. Flexible expenses are those expenses which are wants but are not necessarily needed to survive or whose amount available to be spent on is not always the same such as entertainment. Saving is also an important part of budgeting because having an emergency fund available can come in handy just in case anything occurs. 

Prom..

Prom is one of the most expensive issues in a student's life, apart from college. A great time to put a budget together would be during the prom season. You would know the amount of money that you would have available to spend and you know the expenses you need but how to spend it wisely is the issue. An example of a fixed expense when it comes to prom would be the dress and the limo/car. An example of a flexible expense would be the shoes and the after party. The most important things should be taken care of first and the left over should go towards things that can be substituted for something of lesser value. A budget for prom helps because it would help you, and your parents wallet, avoid going over your available funds.

After Graduation from College..

After graduation from college, so many expense start coming out of nowhere. There are expenses for prom loan payments, life insurance payments, rent because most likely your parents won't enjoy you continually living with them, grocery shopping and many many more. However, your income may be minimal because you have an entry level job. When I created my budget, I had to consider the many opportunity cost because of the low income. In order to have enough money to save and pay for rent and food, I had to choose public transportation instead of a car because cars are more expensive. The apartment that I chose was in a nice neighborhood but was not too big so I had more money. However, because I chose a nice apartment, I barely had money to spend on entertainment and clothing.

 Seeing the amount of money that was needed to make me have a nice apartment but not have a enough to enjoy my entertainment money, made me decide I should start saving as much as I could now. The money that I saved now can be used for some flexible expenses when I graduate from college and the money that I will begin earning can be used to save  for emergency funding. Budgeting from now can really help my future financial planning habits.