Managing Your Finances Responsibly: How to Create a Realistic Budget

Establishing good financial habits at a young age helps you throughout your entire life and can make a significant difference in your long-term financial health and stability. Make a reasonable budget and stick to it – you'll be glad you did.

Creating a personal/household budget serves several purposes:

  • It allows you to see what money you've got coming in vs. what you're spending;
  • It allows you to track your expenses so you know where your money is going;
  • It allows you to detect if you're spending more than you'd like on certain things;
  • It allows you to see where you can cut back on or eliminate costs to save money; and
  • It allows you to assess where you're spending your money so you can make logical decisions about your spending.

Budgeting obviously isn't a "fun" task for many, especially because it often raises challenging questions that may be uncomfortable for you to answer for yourself. Paying close attention to discretionary (non-necessary) expenses – those other than tuition, books, basic shelter and food costs, and bills – and keeping them in check may not seem like much fun to you, but keeping those expenses to a reasonable minimum will pay off in the long term. Although it's not necessarily welcome news for many students, a critical method for minimizing your debt is to "Live like a student while you are in school, so you don't have to live like a student after you graduate."

You can budget the old-fashioned way, with a ledger book and pen-and-ink entries, but this method is often abandoned when time is short. There are free templates available for software programs (such as Microsoft Excel for Windows and Mac), but these also require manual data entry.

There are many tools (including free, online tools) that allow you to budget and keep track of your income and expenses with relative ease.

  • Your financial institution may offer financial counseling and budgeting tools
  • Tools such as Quicken are available for purchase
  • Many websites, such as, provide online tools for user-friendly budgeting and financial management, including mobile-friendly applications. Some of these sites are free, while others charge for access and service after a free trial has expired. Other sites include YNAB (You Need a Budget), Buxfer, mvelopes, Budget Tracker, Budget Pulse, Pear Budget and Billster.