Updated: Apr 22
Budgeting ensures that you will be able to provide for your needs and have enough money for the things that you value.
Creating a budget is easier said than done. You may ask, how do you even start creating a budget? What factors should you consider in making one? Fortunately, if this is your first time making one, you’ll be happy to know that there already exist hundreds of templates tried and tested that you can implement in your system!
In this article, we’ve gathered up a number of budgeting hacks that can help you better money. We made sure that the techniques included were applicable to students!
1.) The Envelope System
Simply divide your total budget into your budget categories. Each expense category should have its corresponding envelope. Label the envelopes. Once you receive your allowance, put the amount of cash for each envelope. When envelope runs out of cash, it’s easy to know that it’s time to stop spending for that category. This technique ensures that you do not overspend to the point where you aren’t able to pay for your fixed expenses such as food, transportation, and etc.
2.) 50/30/20 Rule
The 50/30/20 rule is simple! You’ve probably already heard of this rule. Given your total allowance, 50% of it should be allocated for expenses, 30% allocated for lifestyle choices, while 20% should be allocated for savings or invested for your long term or short term financial goals. You might be wondering, “What exactly classifies an expense as either a need or want?” Needs are your basic necessities, such as food, water, shelter, and clothing that you need in your day to day life to survive. Almost everything else that does not fall under this category are considered wants. Take note that this is only a guide! What classifies as a need or want will vary from person to person.
3.) The Abundance Formula
Your financial goals should not prevent you from sharing your blessings to the less fortunate. Even as students, we can consider adding tithes (charitable donations) to our budgeting plan. The abundance formula essentially divides your total allowance into three categories: 10% for charitable donations, 20% for your savings, and 70% for your monthly expenses (this already includes both fixed and variable expenses).
4.) The 60% Solution
Are you not feeling the 50/30/20 rule? Why don’t you give this a try instead? The 60% Solution proposes that you allocate 60% of your allowances for your ‘committed’ expenses — basic food and clothing, essential household expenses, insurance premiums, utility bills, taxes, netflix subscriptions, gym memberships — and the remaining 40% to be allocated to your savings. We recommend allocating 10% to short-term savings (within 3 years), 10% to long-term savings (more than 3 years), 10% for investments, and 10% for your fun money (money set aside for your wants). This budgeting technique can better help you save for your financial goals.
5.) Mobile Budgeting Apps
Developments in technology has made the process of budgeting so much easier! There are plenty of mobile applications you can choose from which makes budgeting much simpler. These apps are perfect for busy students since you only need to provide a bit of information, tap a few buttons, then theapp will do the magic! (Read: The 6 Best Budgeting Apps You Need in Your Life ASAP)
6.) Saving Jars
If all these tips seem too complicated for you, we can always go back to the basics: Saving Jars or Piggy banks! Be warned. This technique is only recommended if you trust yourself to be disciplined enough to stick to the percentages you set aside for savings and monitor it. One way you can do this is by computing your expenses first and then later allocating the percentages.
7.) The Top-Down Approach
This technique is also called the “pay yourself first” method because in this approach, you will set aside money for your savings first and then live on the rest. This method ensures that your financial goals are met and not compromised because your expenses adjusts to your savings and not the other way around.
8.) Values-Based Budget
Being young, we are at the phase of our lives where we are in a constant state of self-discovery and soul-searching. Let’s take advantage of that through this method! You’ll need to evaluate the things that add the most value to your life, therefore allowing yourself to spend your money only on these things. Ask yourself. Will purchasing this thing spark joy? In other words, This method is done by listing down everything you value and whatever expense that is not included in your list should not be spent on.
At the end of the day, it doesn’t matter which budgeting hack you’ll use. You should choose the best technique that works best for you and your lifestyle. You may choose one or combine several different kinds of budget systems! Just make sure that the budgeting technique you’ll end up choosing is the one that you’ll stick to in the long term. The hacks that we mentioned are only 8 out of hundreds of templates out there. Make a fool-proof budgeting plan by doing some more research! Ask yourself what you really want out of your budget, then start from there. Knowing your options is a good start in creating your own budget.
You may think that budgeting means limiting ourselves, but in reality, budgeting is our first step in our road to enjoying the best things in life.
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- UP JFA Pisopedia