Financial Friday: Check Your Budget
Earlier this year, we linked you to the American Institute of CPA’s tool to prepare a budget. Now it’s time to evaluate it.
Your budget should include line items for things like school expenses, food and groceries, clothing, transportation, entertainment and travel, and living expenses. And then you record your income and other contributions for the school year, making sure your budget balances or you have money left over.
Since budgets are estimates, most expenses will be at least a little off from the budget. That’s ok, but look at the expenses that are off by enough to make you uncomfortable. Look at the details of what you’ve spent and evaluate whether your budget was wrong and should be adjusted, or whether your spending was wrong and should be adjusted. You might change both the budget and your spending.
What’s most important here is that you are making rational, informed choices with your money. That doesn’t make us financial robots, because one line item of your budget should be “fun money,” but it does put you on the path to stronger financial health.
Valrie Chambers, Ph.D., professor of accounting, and Betty Thorne, Ph.D., professor of statistics and the Christian R. Lindback Chair of Business Administration, write Financial Fridays to bolster students’ financial wellness including preventing financial mistakes, safeguarding their assets and identity, and thinking critically about financial decisions. For questions, contact Valrie Chambers at [email protected].