While you can consider ways to make more money, like picking up more hours at work, you should also think about ways you can cut costs. If you can't afford your lifestyle, it's time to make adjustments. Look at your net income compared to your monthly expenses and see if you have enough money coming in each month to cover all your costs. The last step in your budgeting process is to compare all the information you gathered and make sure the numbers work out. If your three-month average spending on groceries is $123, you may want to set the spending limit to $125 or $130. You may want to round the total up to increments of five or ten.
The calculation is pretty simple: Add up three months worth of spending for an expense and divide by three.
The same goes for groceries, takeout and household goods.įor any categories where your spending varies from month-to-month, you'll need to do some math to determine the average monthly cost. If you rent your own apartment off campus and incur utility expenses, such as electric and gas, the cost often fluctuates month-to-month. However, some fixed and variable expenses don't have preset costs. Some variable expenses may also have a set cost every month, such as your gym membership.
For instance, your rent/room and board, meal plan, insurance and phone bills will likely cost the same each month. Many fixed expenses you incur will typically be the same month-to-month, making it easy to put a dollar amount to the cost. Refer to your bank and credit card statements to get the amount. Once you label fixed and variable expenses, list how much you spend on each expense per month.