Many think that saving and budgeting are the same thing. However, they couldn’t be more different.
While saving money involves putting portions of your cash aside and letting it pile up, budgeting is making a plan to decide how to spend your money over a period of time. Budgeting can ensure money is available, help you achieve personal goals and is a great way to practice financial planning, per Harvard Business Review.
For college students, budgeting is an essential.
The key to budgeting is balance. This means basing your budget off of your income, but if you don’t have an income at the time, you can budget your savings. The first step to budgeting is watching your financial habits and placing limits on spending. That way, you have money put aside for the long run.
Budgeting not only keeps your finances under control, but it supports effective financial decision making.
An important benefit of budgeting is that the money you save by controlling your spending has a multitude of uses. Whether the extra cash is put towards a trip in the future, saved for a rainy day or used for an emergency you never saw coming, having extra money for those purchases will improve your financial and mental well-being.
There’s a lot of anxiety surrounding money, and it’s easy to fall victim to stress and frustration when it comes to obtaining money and learning how to spend it. The thought of running low on funds looms over many people’s heads, especially as college students.
As expenses pile up between student loans and all the additional monthly payments that come with adulthood like car payments, insurance and housing, budgeting can be a blessing in disguise to help you organize your finances.
Controlling how individuals spend money can be a difficult task, especially if it means changing the way you normally allocate funds. Wells Fargo recommends tracking your spending, making a list of expenses and consistently revisiting and adjusting as your income or expenses fluctuate.
Having to cut back spending on things you enjoy isn’t fun, but it’s worth it.
From personal experience, I can openly admit that changing your spending habits takes effort. Learning how to allocate your funds takes intentional decision making and time. However, by limiting what I spend on certain things, I was able to use extra savings for a trip I’ve been wanting to go on forever. Travel is my passion and budgeting allows me to see it through.
I’m not saying you need to uproot the entire way you spend money. I’m simply suggesting a shift. Pay attention to your expenses and habits and see if there’s room to reduce what you spend.
Budgeting is not about sacrificing the things you enjoy, but redefining how you acquire them. It’s a small change with big rewards.
DISCLAIMER: This piece is strictly based on the opinions and experiences of the writer and should not be viewed as a substitute for professional financial advice.
