Budgeting Your Paycheck

You’re a student with a job—and a paycheck. Congratulations! But now what? While you want to have fun with the money you’re making, you also know that you need to pay for necessary expenses—and set funds aside for the future. How to manage all of that? This is where budgeting comes into play. 

Budgeting is being intentional about what to do with your money—instead of letting your money (and the impulse to spend) take charge.

When you put a budget into place, you give your money a specific purpose, which makes it easier to make progress toward your financial goals. To be budget-smart (and money wise), just follow these steps.

1. Track all the money you spend.
This is pretty easy. All you need is an old-fashioned paper and pen. Or an excel spreadsheet. Or an online service or app. Every time you buy something, jot it down. Start at the beginning of the month and track everything for that entire month. Then add up everything you spent. Add up all the income you brought in that month too. This gives you the big picture of what you make and where your money goes; also, it’s the starting point for deciding where you want your future money to go. 

2. Figure out where you want your money to go. 
Maybe you spent more than you should on coffee and concert tickets last month, and this month can’t afford a much-needed oil change. This is where you have an important conversation with yourself about needs vs. wants, and then set your spending goals accordingly. You should have a column of necessary, fixed expenses like rent, utilities, groceries, car payment. (Hello, needs!) Make sure there’s enough money to cover your needs before indulging in wants.

3. 50-30-20 rule.
There’s a formula called the 50-30-20 rule. It recommends putting 50% of your money toward needs; 30% toward wants, and 20% toward savings. If you’re about to go off to college or living on your own for the first time, it’s important you learn to budget so you can make your way successfully, while developing good money habits that will guide you through your entire life. 

4. Create a savings plan.
Get into the habit of setting aside money toward savings every month. Even the smallest amount can make a huge difference in helping you avoid going into debt. Think about upcoming expenses such as new tires on the car, a spring break trip with friends, or cell phone upgrade. To prepare, open a savings account and have a portion of your paycheck automatically deposited into it. By automating your savings, you get to set it and forget it. Best part is when you don’t see it, you resist the temptation to spend it. Storing your cash in a high-yield savings account can help your money grow even faster. 

Centreville Bank offers interest-bearing savings accounts to help you grow your money quickly. We partner with the people in our communities, including students, to help you manage your money better and make progress toward your goals. 


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