Avoid Debt
Do you ever find yourself wondering where your paycheck went? If you find that your current budget leaves you with more expenses than money earned, then something needs to change. Generally speaking, people budget their money for two reasons: to reach a savings goal and/or to avoid debt. Creating a budget and sticking to it allows you to assign certain amounts of money to your expenses, making it easier to track where your money is going. By prioritizing your expenses and assigning specific dollar amounts to each item, it becomes easier to identify expenses that you can eliminate so that money spent is not more than money earned.
Track Income
To build a budget and track income and expenses, you must first know how much money you are receiving, even if it is received inconsistently. Budgets can be created to track different time periods (daily, monthly, or weekly) or with each paycheck (weekly, bi-weekly, monthly). People tend to base their budgets on the frequency of their paychecks, but this doesn't mean you have to if it makes more sense to base it on your expenses for a given time frame. You should apply this method of budgeting if you receive a refund for the semester from your financial aid award. You only receive this money once at the beginning of the semester, so you will need to budget for the rest of the semester based on the expenses you know you will or may incur. Tracking money that you are receiving can also help you forecast future income. With a forecasted future income (increased or decreased), you can adjust your current budget in order to prepare.
Manage Expenses
To know where your money goes, you should follow it closely. If asked, most people can tell you where their income comes from, how much they are paid, and how frequently they receive the money. However, most cannot do the same when asked about expenses. Tracking expenses is key to avoiding debt and reaching savings goals. The best way to do this is with a three-tier approach.
Step One
Learn the details of each bill you have — what it is for, when it is due, how much is due, and its level of flexibility (Can you set your own due date?). Your bills are considered "hard" expenses since these cannot be left unpaid and the amounts due typically do not waiver. These hard expenses are the first tier of your expense tracking.
Step Two
After determining your hard expenses, write down all of your recurring expenses that are not bills. Examples include gas, food, personal expenses (like hygiene products), etc. These expenses fall into tier two of your expense tracking since they are necessary items that must be purchased, but they can vary in their amounts if adjustments are required.
Step Three
Once you have identified all expenses that you cannot avoid, you can compare your income for a given period of time to your expenses that occur during that same time frame to determine how much money you have left over after these bills are paid. Knowing exactly where your money is being spent will help you know what items can be removed or added.
Needs vs. Wants
Budgeting can feel drab or stressful at times, but it is necessary if your goal is to avoid debt and save money. A budget plan addresses your needs (i.e. bills) before wants. However, creating a budget and sticking to it allows you to save money so that you can allow yourself to buy the things you want in addition to the things you need. The three-tier approach (see: Manage Expenses) shows you how to identify your basic needs so that you can differentiate them from your wants.
Budgeting Tools
Once you know what your income is, have identified and tiered out your expenses, and know your budget for a certain time frame, you can adjust your budget in order to decrease spending and increase saving. Remember: you want to eliminate debt, not consistently manage it.
The Federal Trade Commission's website provides a basic budget worksheet that you can use or mimic. Be sure to include financial aid refunds in the income section if you will receive a refund for the semester or year.
Keep detailed records of your spending so that periodically you can review (i.e. every month or each quarter of the year) to see if you have been following your plan and making progress toward your goal. There are a number of different apps available, such as Mint.com, that help make it easier to log and track your spending.
Reducing Costs
If you are not sure how to cut costs for your basic needs, you may find the following suggestions helpful:
Food
- Develop a weekly meal plan, make a list and do not veer from it, compare prices at different stores, and use coupons to save even more.
- Eat something before you go shopping. Never shop for food on an empty stomach!
- Plan ahead and pack a meal/snack if you know you'll be somewhere for an extended period of time to avoid dining out, picking up takeout, or ordering delivery. If you do eat out or go somewhere that does not accept dining dollars, try to order food that is reasonably priced.
- The more meal prep you can do, the more you can save. There are countless recipes online or in books and magazines that spark ideas.
- Buy house brands and generic products, which tend to be less expensive.
Personal Expenses
- Thrift and consignment stores offer less expensive clothing and accessory options (there are a number of these in the Richmond area!). Websites that feature small business owners, like Etsy.com, can also offer more affordable options than big retailers.
- Outlet malls and factory stores offer name brand, quality products at lower prices than their retail stores.
- Avoid purchasing "dry-clean only" clothing. You either end up spending more money on those types of clothes by taking them to the dry-cleaners or they end up ruined after a run through a washer.
- ALWAYS ask if a store has a student discount!
- Buy or sell clothing or other items on websites created just for this, such as Poshmark, Letgo, Facebook Marketplace, or OfferUp. Just be sure to use caution and good judgement when determining the safety of a transaction.
- Apps and websites like Groupon and LivingSocial offer savings and deals on entertainment purchases, travel, and activities.
Utilities and Phone
- Ask your service providers if they have any money-saving rate plans, deals, or discounts for students. Remember to figure installation costs into your budget.
- Do your research. Look for the best wireless plan that works for you. Beware of extra data plan charges and early contract cancellation fees.
- Remember to turn off anything that uses electricity when not in use (lamps, television, computer, fans).
Health Care
To excel in school, it's critical that you take good care of yourself first. Visit the Student Health Center to make an appointment if you're not feeling well, visit Counseling and Psychological Services (CAPS) if you want to speak with a professional, find resources for after hours or off-campus care, and learn about the UR WELL program and how to embody a healthy lifestyle.
Transportation
- The University of Richmond offers a variety of transportation options designed to connect you with the city of Richmond. Check out the robust selection of buses, shuttle services, and Zipcars.
- Avoid the expensive habit of driving a car if you can. The combination of gasoline and oil costs, insurance, maintenance, and parking fees in certain places (and parking fines!) can easily turn a car into a major financial burden.
- Carpool with friends as often as you can. You can save money whether you are splitting the cost of gas or the cost of an Uber or Lyft.
Entertainment
- Enjoy performances and events at no cost right on campus at the Modlin Center for the Arts. Visit theModlin Center to learn about upcoming exhibits and performances.
- Get your muscles moving by attending a fitness class. Visit the Weinstein Centerfor alist of the various classes and schedules.
- Join an Intramural League here on campus to meet other students and stay physically active.
