When I first moved out on my own I had no idea what a budget was or what I was supposed to do with one. I had never worried about paying my bills on time because I had so few. When I was in college I was able to make ends meet and still have enough money to enjoy my weekends. However, when I moved into my first apartment this all changed. Suddenly there were bills I’d never had before and after a few months I found my savings depleted, and collectors calling to harass me for payments. I had no idea how it happened. I had a job and it seemed like I was making enough to get by before. Fortunately, I was able to call my family for help. However it was to my dismay that they were not willing to give a monetary donation. They decided to show me a simple way to set up a no-hassle budget allowing me to keep track of my money.

The first step was to determine exactly how much I had coming in each month and what my occupancy/transportation expenses were. Occupancy/transportation expenses should include items such as: rent, car payment, electricity, gas, water, car insurance, health insurance, bus fare, etc. Below is an example:

-Rent $900
-Car $260
-Electricity $98
-Water $70
-Car Insurance $45

TOTAL $1373

After we totaled my occupancy/transportation expenses we had to estimate my other living expenses. For example:

-Food $140
-Gas $130
-Credit Cards $70
-Clothing $75
-Entertainment $120
-Savings $100

TOTAL $635

Finally, we added the two amounts together to get the total amount of out going funds.

$1373 + $635 = $2008

If I was making $2300 a month I would have had an extra $292 left over for emergencies or something fun. What I typically tried to do with any extra that I had was to either put it in a savings account or start an investment account. However, it is also a good idea to keep it accessible in case of an emergency.

So how did I make it work? As soon as I got my paycheck I would pay my occupancy/transportation expenses. These expenses should always be paid no matter what and they should always be paid before anything else. Once I had written the check for those bills I would move on to my other expenses. Now with the other expenses it is important to note that you should pay cash whenever possible. If you set out an envelope for every single expense and then put the appropriate amount of cash in it, you can then put the cash for all of the bills paid by check right into your checking account the day before or after you mail out the bill. This way for all the bills that need to be paid in cash the money stayed in the envelope until needed. For example if I knew that I needed a tank of gas I would grab the envelope with the gas money in it, and then put the receipt in side the envelope when finished. This way at the end of the month you will have a record of all the check and cash transactions you have made.

By using this system it meant that I could not spend more than I had, keeping me from going over budget. I realize that even though this sounds perfect it may not always work and I found myself pulling from one envelope to cover the expenses in another or to buy something extra. However, when the cash was gone it was gone until the next month. When I started leaving my credit cards at home, I realized I was really able to start saving money.

This system is a very simple way that can be adapted to fit your needs, bills and/or budget growth. This can also be an easy way to start teaching teenagers and college students the importance of fiscal responsibility. Always remember don’t spend more than you have and you will be able to make this simple system work for you!