December 6, 2016
You’re ready. You’ve got your spreadsheet open, you’ve got your last three bank statements spread across your desk, and you’ve read and reread all of UCU’s Prepare: Financial Literacy Blog posts. You are doing this budget thing and you are doing it now! Financially literate student that you are, you know that your budget is going to have two basic components: income and expenses. But you hesitate as you start to list your expenses. Your rent and your car payment are easy enough. But what about gas and groceries? And at some point you’re going to have to buy a birthday present for Great Aunt Jemima – that’s an expense too, right? Right you are! You have noticed that not all expenses are created equal, and UCU is here to help you understand the differences.
- Fixed Expenses: This is the easy part. These are the expenses that are the same each month like your rent and car payment. You know exactly what to expect, so budgeting for fixed expenses is straightforward.
- Variable Expenses: These bad boys are a little more complicated. Variable expenses like groceries and gas are items that you know you’re going to need to include in your budget each month, but you won’t be sure exactly what they look like. So how do you factor these expenses into your budget? Here’s where those bank statements come in handy! Take a look at your history to get a ballpark figure, and always budget high. Then when the Ramen noodles go on sale you’re left with a little extra!
- Periodic Expenses: Don’t worry, Great Aunt Jemima. We didn’t forget about you! This is the category for the expenses that come regularly but not monthly. Think car registration and holiday gifts. They’re easy to forget about, but luckily UCU has a perfect solution to keep your budget on track and Great Aunt Jemima happy. As you might recall from Rachel’s October blog post, UCU offers club accounts which provide a simple way to put aside money for specific things. Figure out how much you’re going to need to spend on each periodic expense that you identify, divide that by the number of months you have to save for the item, and there’s the magic number! Plan to tuck that amount away into your appropriately named club account each month, and you will be good to go when the time to pay up rolls around!
Armed with your new knowledge of the three different types of expenses, you are now truly ready to dive into that spreadsheet and get budgeting. Don’t forget to swing by your nearest UCU location if you run into any other roadblocks along the way!