Making a Budget and Sticking To It

As much as some may hate to admit it, saving money is a HUGE part of making money. Like they say, a penny saved is a penny earned. It may be cliche, but it's true as well. However, if you're like some people I know, you want to spend money the second you earn it. The thrill of having the money can only be beat by the thrill of spending it. Not that this is bad necessarily... we all know buying new things can be very fun.


For a while, I was the exact opposite. I hated spending money, unless I really needed to. I wasn't really making much, so I figured I should save what little I did have. But then I ended up with money sitting around doing nothing, while I wasn't being able to buy the things I wanted. I began to wonder, "What's the use of having money if I'm not going to spend it?" Over time I figured out that the best way to manage money was somewhere in the middle: a combination of spending and saving along with some simple cost cutting methods.


If you've been following the organization tips outlined here, or doing somthing similar, you're already on the right track. You cannot possibly manage your money if you're not keeping track of it. There are a few important values to consider when deciding how and when to spend your money:


How much you have. Of course, you don't want to go out spending more than you have to begin with. Knowing this, it is very important to know how much you have at all time. While knowing about how much you have can be nice, knowing exactly how much is much better. You could be greatly over or underestimating your balance. For example, I went through all of last week believing I had ten dollars less than I actually did. Of course it was a pleasant surprise to find 10 extra dollars, I was also rather frustrated to know that there was 10 dollars that could had been used for something besides just sitting around unused.


How much you want to spend. Now I don't mean you should go out and spend all your money once you hit this number. However, it is convenient to know how much you need for the things you want. Not all of these have to be set for the same length of time. In fact, I believe it is better if they aren't. Look at it this way. You can spend months saving up for everything you want, go out and buy them (hopefully not spending all of your money), and then have nothing left to save up for afterwards. Alternately, you can have a variety of short and long term goals. You will save up for one thing, buy it and then start saving for the next. Each item you buy is a measure of your success and motivation to keep going. Also, if you decide you want something else then you can just add it to your list instead of adding it to a neverending grand total of money you need. Personally, I would prefer one thing from my list every couple of weeks than everything in a few months. But of course, it's up to you.

Either way, you should never ever EVER spend all of your money at once. I know it may be tempting once you have just enough to go out and buy what you want. A part of budgeting is controlling this impulse. Try to wait until you have a bit more than you need before you spend money.

Besides the things you want to buy, you should also remember to count any other costs. If you buy your own lunches at school, don't forget to count the cost of lunch each week. Also make note of any monthly subscription fees (iTunes, Netflix etc.).


How much you want to (ahem, have to) save. As I said earlier, you will absolutely have to save some of your money. There are two main ways to do this; by percentage or by dollar amount. That is to say, you can either save x% of the money you make or make sure that you always have x dollars set aside. If you're going with the second option, you may want to increase the amount as your earnings increase. Now I know some of you are thinking, "What's the use of having money if you aren't going to spend it?", like I thought earlier. Well, it's never a good idea to be completely without money. If nothing else, think of this as your emergency money. You never need to worry about needing money for last minute necessary purchases. Saving is also a good habit to get into, since you'll be doing it for the rest of your life ;)


How much you expect to earn. This will be either the simplest or most complicated number you have to keep track of, depending on your spending and earning habits. It will probably also be the one you update most often. The calculations are simple enough, at least. Just add up all the earnings you have "pending" or "processing". This includes checks that are on the way, Paypal and bank deposits that are pending as well as other expected earnings. For example, if you submitted 5 articles to Associated Content last week, you could add another $15+ to your expected earnings.



The basis of budgeting is balancing these numbers. Ideally, your projected earnings will be enough to cover your expenses. This is definitely not always the case, especially not when you're just starting off. Knowing this, you want to make sure you're always getting the most for your money. I'll provide some tips for this later. For now, be sure to follow these tips to better manage your money.