Montana State University

Office of Financial Education

177 Strand Union Building
P.O. Box 174180
Bozeman MT 59717-4180

Tel: 406-994-4388
Fax: 406-994-5488


Budgeting Steps

Budgeting is more than simply adding your expenses for the month and subtracting from your income. It’s about learning how to prepare and plan for the future.

Start your budget today!

Step 1: Start your budget by reviewing your past spending. If you have a checking account, use your checking account register to analyze your income and expenses for the past six months. If you do not have a checking account, begin tracking your expenses and income.

Step 2: Collect all sources of income. Include all sources of income: job wages, financial aid funds, work-study funds, and parental contributions. This is your monthly income.

Step 3: Collect expenses information. Gather all expenses: receipts, bills, and credit card statements. You may want to separate them into variable and fixed expenses. Fixed expenses are expenses that do not change from month to month (ex. rent, car payment); variable expenses are expenses that can differ from month to month (ex. fuel, groceries). Next, list the types of expenses under each category but avoid grouping similar items together. For example, separate your groceries from the cost of dining out. List your power and phone bills separately, don’t use a broad heading such as utilities.

Step 4: Subtract your monthly expenses from your monthly income. What did you notice about the result? Do you have a budget deficit (not enough money) or a budget surplus (extra money)?

Once you have taken a look at your past spending habits, you can begin to plan for the future.

  • If you've been coming out ahead each month, excellent! How is your savings account? Experts recommend 10% of your monthly gross income be deposited in your savings account. This is one important piece of the budgeting process that tends to be ignored. Not having a savings account is the fastest way to ruin even the best budget! If you are unprepared for the unexpected, you may quickly find yourself facing financial trouble. Having money in a savings account may assist in preparing you for situations such as car trouble or unexpected medical emergencies.
  • If you are having trouble covering your expenses or are covering your expenses but have nothing in savings, it's time to examine where your money is going. How can you cut back or adjust your spending? Sometimes, it is a matter of identifying and monitoring small daily habits to find ways to save money.

Get Money Smarts is a financial education website designed to assist college students in making smart financial decisions and choices. Get Money Smarts does this by providing an exceptional budgeting section that empowers students and parents to financially plan for an entire semester.

A budget, also known as a spending plan, is a must if you want to be in control of your money. You must design a realistic plan for spending your limited resources and be flexible to adapt to the changing circumstances of college life.
While designing a budget in Get Money Smarts, you will:

  • Identify all income sources
  • List fixed and flexible expenses
  • Set up a monthly estimated budget
  • Add actual transactions
  • Review and modify the plan on a regular basis

Why Budget?

By building a budget, you may realize you are financially better off than you thought or you might discover you need to get a part-time job to bridge the gap between income and expenses while you are in school. Either way, a college budget puts you in control, teaches financial management skills and helps you avoid the serious consequences resulting from poorly managed personal finances.

Begin creating financial freedom and build a budget today.