Post-Grad: Budgeting now a good thing

We have heard it all before from our parents: “Don’t waste your money on useless things.” What most people don’t understand is that useless things are usually what make us the happiest. Sure, you don’t need a Playstation 3, but odds are you want it. How else will you be able to play the new Call of Duty? What about that cute pair of shoes in the window that would look great with that top you just bought? You don’t need them, but they would complement your outfit nicely.
Clearly, I’m not saying that you shouldn’t get these things. My room is filled with useless things ranging from autographed memorabilia to an assortment of DVDs. The point is that you have to be smart about how you spend your money. Money management skills are needed no matter how little or, for the lucky few, how much money you have.
Begin by keeping track of how much money you have and how much you can afford to spend by creating a budget. I know creating a budget can seem overwhelming, especially if you’ve never done so before. A budget can also seem scary when you see how much debt you’re really in. The best course of action can be to create an Excel worksheet — nothing fancy — to determine your income (how much money you receive from your job, help from your Mom/Dad, etc). Then calculate your expenses (costs of books, tuition fees and other important payments) and when they are due.
Keeping tabs on your expenses is the most important part. I cannot stress this point enough. Whether it’s your loan expenses or credit card bills, make sure that you always know how much debt you have at the moment. Far too many people hate to look at their bank accounts because they are scared to see how much they are spending. Out of sight, out of mind doesn’t really apply when the debt collectors come knocking on your door. Knowing what you have shows you how much money you have to work with. For instance, you may begin to notice that you don’t have as much money as you thought because you go out to eat a lot instead of dining at Daly’s or bringing back a home-cooked meal. Habitually tracking your expenses will help you detect spending patterns over time.
If your income exceeds your expenses, then congratulations. You have excess money that you can budget and use on the things you want. However, don’t waste all of that excess cash. If you really want an X-Box 360, save money to purchase it. Don’t just splurge all of your income or else you can be left with an overwhelming amount of debt. Determine the amount of money that you need to reach your goal. Calculate, realistically, how long it will take you to obtain whatever it is that you desire.
So, don’t turn a blind eye to how much money you have and think that you will deal with the lack of funds once you get there. Money management is not something that should be taken lightly or put aside. If done right, not only will you be able to keep your debt at bay, but next time your parents tell you not to spend your money on useless things, you can whip out your budget sheet and show them you have things under control.

– Oliver Joszt

Class of ’09

Graduate student in the Accounting Department