Mind your money: Developing a personal budget

What is a personal budget? It is a plan that allocates future income or cash (whether from working, loans, gifts, etc.) toward personal expenses, saving and loan repayment. To create a personal budget as a student, we focus on expenses, both fixed and variable. A fixed expense is one that is known or that will be recurring every month. Fixed expenses can include things such as rent payments, books, groceries (to a certain extent), insurance, utilities, telephone and transportation costs. Variable costs are those that will fluctuate more each month, such as travel, gifts to others and dining out.

As a student, we focus on expenses because you haven’t yet entered student loan repayment and likely do not have a mortgage. The task of creating a budget will create a habit that likely will follow you into your post-graduate lives. Follow these easy steps to create a basic personal budget that you can tailor:

  1. Gather all sources of income/cash, whether from loans, family members or jobs for the past three months. Total this amount and divide by three. This is your monthly income/cash to use to start.
  2. Look at the previous three months and break down your expenses between fixed and variable. Divide fixed expenses by three and then variable expenses by three. This gives you an average “budget” amount as to how much you spend on variable expenses each month.
  3. Subtract the totals in No. 2 from the total in No. 1.  If you end with a positive number, pat yourself on the back. If you end with a negative number, you will likely need to make some adjustments because your spending is higher than your income. If you use high interest credit cards to get by, this is even more reason to reevaluate your spending.

If you find yourself in the negative, reevaluate your “needs” vs. your “wants.” What did you spend money on in the prior three months that you could have gone without? A personal budget allows you to easily see where you can cut back and where you spend most of your money.

There are a lot of apps now as well that make sticking to a budget easier, such as, and

So, do you have a budget? How often do you visit it to “check in” and see how you are doing?

~Megan Mathers, JD, Mathers Law & Tax Services

Megan Mathers

Megan is an accountant and tax attorney with Mathers Law, a firm focused on providing accounting, tax, business advisory and legal services to the dental and medical communities. Megan earned her Bachelor's Degree in Accounting from Marquette University and her law degree from Loyola University Chicago School of Law. Megan's practice focuses on tax compliance, tax planning and wealth and estate planning.

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