A well developed budget is an important tool in your overall debt management plan. A good sound budget will not only help you keep track of your student loans, but it will also help you keep track of your other monthly expenses. You will acquire a better understanding of your potential weekly/monthly/annual savings, spending money and what additional funds are available to use toward the principal or interest payments on your student loans.
Creating and closely following a carefully planned budget is an important component of your future success. To construct an expense budget for yourself and/or your family, you will need to estimate the daily/monthly/annual costs of your needs. These costs include: rent/mortgage, renter/home insurance, disability and health insurance, student loan repayments, auto loan payments, auto maintenance, auto insurance, food, clothing, household operations, savings, entertainment, charitable donations, state and federal taxes, social security, IRA contribution and emergency funds for unexpected events.
Organizing A Personal Budget
Before organizing a personal budget, you will need a basic understanding of where you and/or your spouse (significant other) want to be in life. Although your goals will be redefined and possibly change over the years, it is safe to assume that you have already identified what is important to you. It might seem like you will never be able to financially accomplish your desired goals. Keeping a strict budget will show you how you can and what you need to do to get what you want!
Here are some questions, for you and anyone else in your life, to think about and answer. Although many of them may seem irrelevant to you in your current situation, the more specific you can be, the more accurate your budget will be.
- What is the salary expectation of myself and my spouse (partner)?
- Will I be the sole household support? If so, for how long?
- Do I want children, if so when? How many?
- What type of investments do I want to make?
- Where do I want to live? What type of community, home, location?
- Do I expect to have more than one home?
- How important is it for my household to own an expensive car? What kind of education do I want to provide for my children?
- What do I expect my retirement to be like? What kind of financial sacrifices am I willing to make now to get there?
- What kind of vacations/activities/sports/hobbies are important to me?
*Please note: All terms in bold/italic appear on our Glossary page.