Ways to Manage Your Budget Long-Term

Written by Blanca Rodriguez

Keeping a close eye on your financial transactions, staying as organized as possible, and avoiding debt are some of the fundamental steps to creating a budget that you love and are likely to stick to! 

Graduate school is difficult. I am sure it is not a surprise to you. New graduate students are often suddenly put in a position where they have to balance a plethora of new commitments, responsibilities, and life-situations. Some of the common items that need juggling include adjusting to new cultures and environments, maintaining healthy social relationships, classes, research, TA-ships, professional development activities, and self-care. 

One of the topics that is not often talked about among graduate students is the importance of building a budget and sticking to it. There is a strong assumption at the university-level that graduate students have the skillset to make financially responsible decisions, especially in the Orange County area. In large part, the only reason most graduate students can even afford to live near UCI is through heavily-subsidized housing that has become increasingly difficult to receive. Otherwise, the graduate student pay leaves a lot to be desired and even much less to do with. Therefore, practicing effective budgeting, organization, and financially-responsible techniques will allow you to work through graduate school with financial freedom and less worry. ☺ 

Like most skills gained throughout life, being good with money is a process. You become good by making small adjustments and making them habits. You cannot expect yourself to become a money-guru overnight. You certainly should not expect a quick and easy transition to financial freedom. It is important to acknowledge that you will make mistakes, that is okay! Mistakes are the foundation of improvement, so remember to be patient with yourself! 

The following 3 steps are heavily inspired by a series of workshops given by the Financially Fit Foundation’s Financial Makeover series. I was very lucky to have gone through the workshops taught by Chelsea, which was hosted at UCI’s FRESH Basic Needs Hub. (I highly recommend signing up for their newsletter and following their social media as they will often have interesting and fun workshops) 

Get organized! 

The first step to understanding your financial situation is to get organized. Build a simple yet systematic algorithm for checking and processing mail (this includes bills, bank and credit card statements, and anything in the mail that requires your attention). 

Set a time and day of the week to check your mail and decide what to do with it 

It is very tempting to take mail, set it aside and forget about it. However, doing so further enforces the habit of dealing with these things by forgetting about it. The longer your forget about it, the more likely you are to make uninformed decisions with your money in the future. Therefore, I highly recommend for you to set aside 15 minutes once or twice a week to check your mail. I recommend putting it as a recurring event on your calendar. You may also choose to reward yourself with a small treat or an activity that you enjoy afterward so you can reward your behavior. This will allow you to start making it a habit to check your mail, so stick to it as much as possible! 

Typically, your mail will fall under 2 categories: (1) trash, and (2) action mail. You can start processing it by doing the easiest part first: recycle the trash, or shred it if it has personal information. 

Action mail will often be mail that requires further action. If you have to respond to the mail by a certain date, annotate it on the sheet of paper as visibly as possible and leave it in a very visible place for you so you do not forget. You can also start a to-do-list with a deadline. The app, Todoist, has been a very helpful software for me.. You can also choose to be systematic and spend 15-30 minutes once a week to do what needs to be done with it. 

Of course, this is not limited to just physical mail. Electronic mail can be handled the same way too. Gmail has a very nifty tool for labeling and organizing your mail. On Gmail they are called labels. If you get spammed with promotional emails, consider unsubscribing unless you need them. I promise it will make your life easier. Declutter your mail while decluttering your mind!

Simplify your life and pay bills once a month

Most graduate students get paid at the beginning of the month. That is also when rent is usually due. Since you’re likely going to be doing that transaction at the beginning of the month anyway, it might be beneficial to simplify the hassle of paying bills by paying them all at once at the beginning of the month. Once again, the more systematic and consistent you are about it, the more beneficial and likely it is for you to make it a habit. Since it’s once a month, reward yourself afterward with an ice cream or watching a favorite movie again! Do what works for you!

Change closing dates for credit card and checking account statements so that they work for you 

Not many people know that you can call financial institutions and ask them to change the closing dates, and hence the pay schedule for your bills. For example, if your credit card bill “closes” (meaning a statement is generated and interest is calculated for that period) at the beginning of the month but payment is due at the end of the month before you get paid, it will impossible for you to pay that bill at the beginning of the next month. Typically, you will want your bills to be due about 1-2 weeks into the month. This will give you a little time to pay the bill after you receive it. You can either call your bank and ask them to do it or walk into your bank and also ask them to do it. Threaten them to take your business to a different financial institution if they don’t comply! 

For reasons that I will get into the next section, you may also consider asking your bank to start the statement period of your checking account on the 1^st of the month and end on the last day of the month. A lot of banks, however, may be hesitant to do this because it’s inconvenient for them. (Again, threaten them if they don’t comply!) 

Consider doing paper statements

This tip is controversial for me, speaking as an environmentalist. Companies will strongly and almost force you to get paper-free statements under the guise that it’s “more environmentally friendly”. I mostly agree with this, assuming that most people see their statements and then get rid of them. You, however, are smart and will keep these financial documents for your records. I am mainly a proponent of paper statements because it is tactile. It forces you to physically hold and process the statement. It will also become an important component in the next section where I will discuss some techniques for systematically keeping track of where your money is going. 

Know where your money is going

By the end of this blog-post I hope I will have given you the tools to help you answer 3 important questions at the end of each month: 

1. What came in?
2. What went out?
3. Are you happy with where your money went?

The first question will hopefully be simple to answer since most graduate students get paid at the beginning of each month during the regular school year. However, if you have a side job, make sure you track how much you are making as well. 

The second and third question might be more complicated. Personally, answering these questions brought upon unexpected anxiety and depression the first couple times because after 2 years of mishandling my money I had to come face to face with the consequences of my habits: being almost 10k in credit card debt and still feeling like I didn’t have enough for basic necessities. It was just as Chelsea had mentioned during the workshops: “The truth will set you free, but first it will piss you off”. The first couple of times you track your money you may feel uncomfortable or ashamed of your spending habits, but it is important to work through them for the sake of improvement. Constant reflection and adjustments are part of the process, so remember to be kind to yourself!

Set a time and place to review all your financial transactions

Just like when you are getting ready to pay bills and process your mail, it is also important to set a time, place, and ambiance (hopefully a quiet place where you can focus) where you will sit down and track expenses. Set a reminder on your phone or a recurring event on your calendar to remind you to do it. Depending on your financial situation, this task may take hours, so prepare by setting a time, place, and a rewarding activity and/or snack afterward for incentive. 

Consider keeping as many receipts as possible

No one really likes those pesky pieces of paper since they just accumulate and end up in the trash. These pesky pieces of paper actually have an important role. The main point of a receipt is to have a physical paper trail that corresponds to the digital transaction. Receipts are a way of confirming the amount charged on your statement with a physical copy. If the amounts are different, you may dispute the charge and get it resolve fixed. Keeping receipts is also a way of systematically checking for fraudulent charges. If you don’t have a receipt for a transaction and don’t remember making the purchase, call your bank as soon as possible and have them change your card number and refund you. 

I recommend keeping as many physical receipts of purchases and storing them in a container until the end of the month. At the end of the month, you will take those receipts and confirm the amounts with the statements. You may dispose of them afterward (recycle!). 

Categorizing and tracking expenses and debt

Once again, try to be as systematic as possible. Effectively tracking your expenses starts by making categories and a code for each one. Here is an example of the categories I use: 

Expense Category
Appliance, Furniture, Décor	1
Transportation	2
Celebrations	3
Rent	4
Eating out	5
Groceries	6
Entertainment	7
Medical	8
Utilities	9
Wardrobe	10
Personal Grooming	11
Charitable Contribution	12
Education/Personal Development	13
Unreimbursed job stuff	14
ATM withdrawals	15
Debt	16
Interest	17
Travel	18
Total

These categories are in no way exhaustive so feel free to add or remove categories that suit your needs. Once you have established your categories, you will then take each credit card and checking account statement and categorize each transaction. Add up each category and fill in your monthly expense tracker. Here is an example expense tracker. You can feel free to add or remove as you feel fit. You can do it digitally if it is more convenient for you. I personally prefer to take out my pen and writing it out because it is more tactile.

At the end of it all you should have a sheet that tells you how you spent your money throughout the month. For this reason, it is important to try to get a statement from your bank that covers the expenses from the first to the last day of the month. (Bank of America allows you to choose a time range, which is useful!)

Make small adjustments as you go

Once you see you expenses you may be shocked and decide to drastically change how you spend money. Try to avoid doing this since doing so will likely result in you drastically changing your lifestyle. It is not something that can be done overnight. Attempting to do so will only lead to more frustration. Try focusing on small adjustments and being a more wary consumer (focus on what you need while still allowing you to have a little bit of what you want). 

Remember to reward yourself when you’ve achieved small goals!

Once you’ve figured out where your money has gone, it is time to ask yourself whether you are happy with your spending. Basic necessities aside, has your money gone to the categories that you value? If not, write out how you plan to do it a little bit differently the next month and leave those goals in a visible place so you don’t forget!

Build a value-based budget

Once you have tracked where you are spending your money, you can then begin to build a budget based your earnings, mandatory expenses (rent, utilities, and other basic necessities), and disposable income. You may choose to use this form to help you get started. 

Remember, this is your budget and it should reflect what you value. For example, I value my health so I focus my spending on whole foods and consuming what I buy, therefore minimizing expenditures on eating out. 

If you have debt, focus on paying that off to avoid paying excessive interest. You may also consider saving a portion of your paycheck for future unexpected expenses. 

3 Idealistic general rules to live by:

1. Spend less than you make
2. Invest the rest
3. Avoid debt

When I first read these rules, I laughed because it makes 100% sense but is completely unrealistic with a graduate student pay alone. Think of these as guidelines, an ideal to strive for, if you will. I picked these three guidelines from A Simple Path to Wealth by J L Collins. I highly recommend the read as he describes everything you need to know about investing for long-term growth. 

Some other tips: 

For security purposes, I highly recommend investing in a shredder and using it to shred any unnecessary document that has your name, address, and any other sensitive information (account numbers, tax ID#, social security number, birthday, etc.). 

If you are tired of getting spam in the mail and phone calls by credit card companies, you have the option to put yourself in the national Do Not Call List and opt out of receiving pesky credit card/line offers.

You are entitled to check your credit score report for free from 3 major credit reporting agencies, Transunion, Equifax, and Experian here. You can ask for all 3 at the same time once a year or space them out so you can check on your credit score more often and detect any identity theft if it does occur.