For many people understanding their budget and how it will work with their student loan repayment can be overwhelming. Listed below is a simple way of determining your monthly budget without the need to write everything down.
Many financial advisers make you create a detailed budget when developing a financial plan. This often can be a stumbling block for people. Tracking your spending at a detailed level is cumbersome. A plan needs to be functional or it is worthless. So what is the compromise? Try moving to a cash system for a few months as an alternative. It will require you to limit the use of your debit and credit cards during this time.
So how does it work? You still need to create a general budget which includes your total net income and general living expenses. This will allow you to see the amount of discretionary funds that are still available. Most people do not understand how they spend their discretionary budget. Access to money has become very easy and we lose track of how much we are really spending due to this easy access.
Before the electronic age, people needed to go to the bank to withdraw funds and most personal transactions where done with cash. You would go to the bank once a week, deposit your paycheck and withdrawal the amount of funds you thought you needed for the week. In most cases, you would live within those funds per week. This eliminates your need to write everything down. It forces you to spend only the cash you have in your pocket. This is a great process to put in place if you are trying to control your spending.
For this planning process to work, you cannot use your credit cards or debt cards. The only exception is if it is an emergency.
Within this process and any process you need to have flexibility. There is always the unexpected expense or the great opportunity. These expenses need to be part of your big picture budget and indirectly planned for.
So you may want to ask your parents what it was like in the good old days when credit cards and ATMs where not available. Knowing how much money you had in your pocket was all you could spend.