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Welcome back, students. Because I read data every day about the number
of students who find themselves buried in credit card debt, I want to
help you avoid money problems. So I'm going to tell you about a very
simple way to keep your income and expenditures in balance.
All you need is a checking account and a checkbook register. You are
going to use this checkbook register to keep track of everything you
spend - checks, cash and charges on your credit card. This eliminates
the need to sort through separate receipts or try to remember how that
$20 evaporated in the past couple of days.
As I talk you through this system, I suggest that you visit the Montana
State University Extension publication site at
www.montana.edu/wwwpb/pubs/mgfinance.html. The site includes
downloadable guidelines for tracking expenses by using a checkbook
register.
The purpose of keeping track is to make sure you spend money the way
that you planned. Start by deciding how much you want to spend each
month on entertainment, eating out, CDs, etc. If this feels confining,
use a category called "whatever." As long as you have money in that
category, spend it any way you want.
Cut a strip of correcting tape the width of your checkbook register, and
press it across the line to the right of the date column. Now draw
vertical lines from the top to the bottom of the checkbook register and
create seven or eight columns. At the top of each column, write in your
budget category. Examples might include food, housing, transportation,
clothes, medical, personal care and entertainment.
In the line immediately under your categories, write in how much you
plan to spend that month. If you plan to spend $500 for housing, write
it in.
If you write a check, you must deduct the amount from two places: the
budget column and your checkbook balance. If you spend $25 in cash for
clothes, just deduct the amount from the clothes column (not the
checkbook balance). The same goes for credit card charges. Deduct them
from the appropriate category but not from the checkbook balance.
If you follow this simple plan and keep your spending in line with the
amount of money you have, I can guarantee you will not find yourself in
a money crisis.
For more information, contact your local
Colorado State University Extension office.
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