financial first steps

Budgeting Basics

Which of these statements best describes a personal budget?

1. A complex plan that makes it necessary to curb your spending.
2. A written plan that shows how money will flow in and out of your personal accounts each month.
3. A formal plan that can’t be changed once it’s put in place.

"B" is correct. A personal budget simply helps you track where your money is going, so you can make more informed financial decisions. To set one up you: Add up your monthly income. Then add up your expenses. Be sure to include student loan payments as many of these will start six months after graduation. Finally, subtract your expenses from your income. The money that’s left is the amount you have available to save or spend on new expenses. Click here for help preparing a budget.