There are a lot of ways to spend a paycheck. Do you know what you do with yours?
It seems like a simple, almost silly, question. Of course you know what you do with your paycheck. But can you really account for all those dollars you part with every month?
Welcome to lesson #1 of how to budget and save money: Make a list of your monthly expenses and how much you should be spending on each one.
When I was on the job prowl, I made an Excel spreadsheet (with the help of my Excel-savvy boyfriend) charting how much I expected to spend on monthly expenses. Gas, grocery shopping, rent, water, gas, electricity, internet, phone, renters and car insurance, entertainment — it was all on there. I estimated how much I would spend and what percentage of my income I wanted to put away, and I arrived at what salary I would need to support all of that.
Now that I have a job, I look at my budget once or twice a month to see if I’m on track. That way if I spend a little too much on restaurants one month, I can scale back the next.
A budget is also a safety net. If you stick to what you’re supposed to spend, you won’t scramble for money if something unexpected occurs. Last month, I shelled out a few hundred dollars for new car tires. A budget didn’t make me more elated about the situation, but I wasn’t panicked that I wouldn’t have the money to cover the new tires or that I would have to eat ramen noodles for the next month.With my breakdown of monthly expenses, I know what percentage of my paycheck goes to what. I can account for all those dollars I spend. I feel in control of my money.