The first rule of finance is money is worth more today than in the future. This is partly because the money you have today can be invested and grow as time progresses. Therefore, it’s important to save as much as possible and budget your spending. Also, without keeping track of your spending, it is easy to let small frivolous purchases add up.
How to Budget:
A budget should be unique to you and your paycheck/allowance. However, a good rule of thumb when in high school and college is 50% needs, 20-30% wants, 20-30% savings. Whenever possible, try to make the wants section as small as possible.
With savings, it’s a good idea to keep some money in a checking account for easy liquidity (access to cash when you need it). However, most checking accounts won’t offer interest payments. Therefore, look for an online bank with interest checking accounts. If you are confident you won’t need the money for months at a time, place it in a CD (Certificate of deposit) for even high interest rates.
Our Favorite Budgeting Tools:
1. Mint
Mint is a free easy to use tool that allows you to see your budget at one glance. It’s available online and through an app so there is always easy access. Mint allows users to link their bills, bank accounts, credit cards, and PayPal to give the most accurate picture of their expenditures.
2. Personal Capital
Personal Capital is another free tool that is available online and via an app. It is more advanced (and complicated) than Mint. Personal Capital allows you to link your accounts.
Alternatively, the following spreadsheet is a great, simple way to keep track of your spending.
Basic Budgeting Spreadsheet Example
.xlsx
Download XLSX • 59KB
Online Simulations for Budgeting Practice:
This is an app created by Visa to help students/parents budget their prom expenses
Another app created by Visa to teach personal finance through an NFL themed game
Practice investing in the stock market with paper money through this site (or app).
Complete 16 missions that save people from financial trouble
Make decisions, see how they can impact your future, and plan for retirement in this vampire-themed game.
Photo Credit: Photo by Karolina Grabowska from Pexels