What is a budget?
Budgeting is the process of planning the most effective way to use financial resources by estimating monthly expenses and resources that will be available to cover these expenses. A budget can help you identify how you spend your money and at the same time help you control your expenses by keeping them within certain parameters. It also helps you calculate the monthly amount to pay your student loan.
The three most important steps in creating a budget are the following:
Calculate income â€“ take into consideration your monthly net salary -- that which is available after state and federal deductions. Add any other additional source of income. For example: family, Veteranâ€™s, and Social Security assistance, among others.
Calculate expenses â€“ include all expenses, such as: living expenses, food, auto maintenance, healthcare, child or dependent care, student loans, personal loans, credit cards, and other expenses.
Determine the difference â€“ if the expense total is greater than your total income, you should verify and reduce any unnecessary expenses so that you will have money in case of an emergency.
If you find yourself in financial difficulty, it is important to ask for help from your student loan agency in order to find easier monthly payment alternatives. However, if your total income is greater than your total expenses, you should consider a monthly payment plan with a higher amount in order to reduce the total amount of interest and pay off the loan(s) before the agreed upon time.
To Calculate Your Budget