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Being financially successful starts with knowing your income and spending habits. Although budget is often a word no one likes to hear, having a realistic budget (or spending plan) is the first step in learning how to manage your finances.

Create a spending plan
Pay yourself first
Needs versus wants
Live like a college student
Freebies, Deals and Steals for UTSA students

Create a spending plan (budget)

If you're looking to reduce/eliminate debt and stop living from pay check to pay check, then creating (and sticking to) a spending plan is essential. Follow these steps to create a budget that you can stick to:

STEP 1: Track your expenses for a month

You can't know what to budget for if you don't know your spending habits. For a whole month, diligently track each purchase you make; from rent/mortgage bills, to gasoline and food and even your latte at the local coffee shop.

STEP 2: Categorize expenses

Now that you know what you spend your money on, start putting the expenditures into categories. Some suggested categories include: rent/mortgage, insurance, utilities, food, gasoline, school expenses, entertainment, dining out, savings, and credit/loan payments. Make a note if some of these are fixed (i.e. rent payments are the same every month) or variable (i.e. grocery bills, gasoline expenditures).

STEP 3: Total your monthly income

Figure out all sources of income for the month. If are a contract worker and your paycheck fluctuates, figure out an average monthly income.

STEP 4: Total you monthly expenses and compare

Now that you know your monthly income and expenditures, do a comparison. Find out if your income is greater than your expenses or vice versa.

STEP 5: Make adjustments to your expenses

If your income exceeds your expenses, make sure you are paying yourself first. This means you place money into savings prior to using income for other expenses. You can also decide to set some of the extra money aside to pay down consumer debt like credit cards or student loans. If your expenses are larger, you need to evaluate your spending habits and make adjustements to spend less on the more flexible categories such as dining out or entertainment (see ideas for steals and deals on entertainment for college students). Once you set an allotment for each category, stick to it! Some may find that using cash or limiting trips the to ATM can help you stay on track. Remember to prioritize your needs versus your wants and spend accordingly.

STEP 6: Review your budget monthly

Monitor your budget monthly to see if other adjustments need to be made. If you find that one category is consistently overspending another, change the budget allotments. This will help keep you on track.

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Pay yourself first

Paying yourself first means that the first thing you do when you receive your paycheck is put a portion directly into a savings account. Your inclination may be to use whatever is left over at the end of the month, but typically if you have it, you'll spend it rather than save it. Paying yourself first ensures that you are consistently building your savings. Why is this important? Well, consider when an emergency comes up like a flat tire: if you have savings, you can pay this out of pocket rather than relying on using a credit card. Many banks will even allow for your paycheck to automatically put a certain percentage of your choice into savings without you having to do it yourself. Having savings a a good way to ensure financial security and keep consumer debt down.

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Needs versus wants

Have you ever thought, "I have to have... X"? We all have at one point or another. Before you make an impulsive purchase evaluate if what you are going to spend money on is truly a need or a if it's a want. Needs are things that are necessary for day to day life: rent, food, school supplies, transportation, utilities. Wants are all the other extra things in life: vacations, technologies (the latest cell phone, MP3 device or gaming system), dining out and going to the movies or a concert. It's fine for you to spend money on your wants but make sure to prioritize. If you know you need extra money for some school supplies you may want to think twice before purchasing concert tickets especially since this would mean you will end up not buying what you really need or going into consumer debt to take care of your needs. Evaluating your montly income will give you a better understanding of where your spending habits tend to lead you in the need/want area.

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