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If you are a recent high school or college graduate, you are probably excited and ready to jump into adult life and all the possibilities it presents. Are you also ready to handle the expenses? Getting a hold on your finances now will hasten your independence from your parents and set you up for a prosperous life ahead. The first step: Make a budget.

We know… “The B word” is not something most people want to hear. “Budget” is often synonymous with “settling for less.” If you haven’t had a budget before, it feels a lot like stepping on the scale on January 1st. But working within a budget is the difference between controlling your money and your money controlling you. Which do you want?

Start by simply tracking all your income and expenses for a month before you even set up your budget. Whether you use pen and paper, or a spreadsheet, or a budget app, remember to include every detail. This can be a very eye-opening experience as you are forced to recognize your spending and saving habits. Analyzing this data at the end of the month will help you develop a strategy.

Tracking your income is pretty straight-forward. Any money coming in from any source, like your paycheck, payment for odd jobs, financial aid overages, or any kind of assistance from your parents, is included in this category.

Tracking your expenses is where the real choices are made and can be fun if you have a positive mindset! This is where you will really meet your goals. Develop categories for your expenses, such as housing, food, entertainment, savings, loan repayment, and auto expenses. Are you surprised at how much you spent on food? Would you like to spend more to pay down your debt or increase your savings? Are some of the categories fixed each month, or are they flexible and subject to change?

Now that you’ve seen your actual numbers for a month, draw up what you would LIKE to see happen each month. If you would like, say, to save $1000 by Christmas, divide that total into how many months are left to reach your goal, and shoot for budgeting that much each month. If this seems like an unreasonable goal, settle for a smaller total figure, or see if other categories could spare a few dollars. Then STICK to your plan!Untitled design(3)

Some tips:

  • Use a platform that works for you. Some people like to scratch out the numbers on paper, some prefer an app on their phone. YNAB (You Need a Budget) offers an app that is easy to use. Dave Ramsey, well-known financial planner, recommends an envelope system in which each budget category has an envelope of cash that you use and when the money’s out, you’re done for the month in that category. Find one that works and STICK TO IT.
  • Build an emergency fund. Some experts recommend three to six months living expenses as a buffer, but this amount can often seem unreachable if you are just starting out with a budget. $1000 is a good place to start because it can cover many emergencies, such as a car repair or ER bill. Remember to always replenish the emergency fund after you dip into it. And aim for a much higher balance, up to six months living expenses, over time.
  • Avoid credit card debt. We know that it can be tricky to build credit as a new adult, so having a credit card is a good idea for this purpose. But be disciplined. Use your credit card like it’s your debit card and pay any purchases off immediately. If you carry a balance each month on your card and only pay the minimum payment, you will be paying high interest for years. If you’ve already got a big credit card balance, you can recover. Stop using your card. If you are tempted often, keep your card at home when you are shopping. Then pay as much as you can OVER the minimum payment amount until your debt is paid.

Like most life lessons, budgeting can seem painful at first. But the payoff is financial independence and control. You can do it! To get started, try downloading this simple budget spreadsheet on your phone or computer. Just plug in your own categories and numbers, and put it to work!