Loyola University Chicago

Financial Aid Office

Budgets & Spending Plans

A budget is just a plan for how you're going to spend your money. By tracking income and expenses, you'll know what's coming in and what's going out. This gives you the power to prevent overspending, to allow for fun while also covering basic needs, and to work toward the goals you have set. Not sure where to start? Follow these steps or schedule a one-on-one coaching session to review your own personal budget.

  1. Set realistic goals. Decide what's important to you so your budget matches your priorities. Want to retire early? Maybe you should increase the amount you're putting into your retirement account. Want to go on a vacation next year? Determine the costs for your trip and then divide each cost up over the number of paychecks between now and when those expenses need to be purchased. This will tell you how much to set aside from each paycheck for your trip.
  2. Determine your net income. This is the amount you receive on payday after taxes and other expenses like health insurance premiums are taken out. If your hours vary, use a estimate on the lower end to be safe. If you consistently go over budget each month, you may need to look at ways to increase your income (e.g. increase hours at work, get a second, part-time job).
  3. Make a list of all your monthly expenses. Divide it between fixed (the amount stays the same every month), variable (the amount changes month to month), and periodic expenses (occurs occasionally like medical expenses and car insurance). If you need to estimate, round up to provide a cushion. Here's an example of typical budget percentages:
    • Housing & Utilities: 35%
    • Insurance (medical, auto, life): 10%
    • Food: 10%
    • Transportation: 10%
    • Savings: 10%
    • Entertainment: 10%
    • Clothing: 5%
    • Miscellaneous: 10%
  4. Separate needs and wants. While something might be a need, like housing, do you need laundry in-unit or is that a want? Some items, like clothing, can fall into either category depending on the situation. This list is highly personal and can change over time.
  5. Pick a budget method. We have included sample budgets below, but there are many different resources and apps out there that can assist you. The trick is to find the method that works for you and to stick with it!
  6. Pay yourself first. This means that you should set aside a certain amount in savings each payday before you pay anything else. This will ensure that you have an emergency fund in case the unexpected happens. After putting money into savings, you should pay anything that falls under the needs category and then whatever is left can go toward your wants.
  7. Review your budget regularly. You may need to make adjustments as your life and your priorities change. Learn from your mistakes and find what works for you. A good exercise to check whether you're sticking to your priorities is to make a list of the last 10 things you purchased and rank them from most important to least important. Are you spending too much on things that aren't a priority to you?

Resources