How to build your first budget

How to build your first budget
By Liz Pulliam Weston

Can you afford a car, a trip, a new computer? Learn how to master food, housing, savings and the rest, and you can fend off ugly money problems.

Angelica Trummell, like millions of other college graduates, is trying to figure out how to make ends meet now that Mom and Dad won't be sending checks every month.

It's not that her parents paid for everything. The art-history major worked for the campus bookstore at the University of California, Riverside, and took out $10,000 in student loans to help pay the bills. She also racked up $2,000 in credit card debt.

But facing life now that she has to foot the entire bill for rent, food, utilities, insurance and debt payments is more than a little daunting.

"A lot of my friends are going back home" because they can't afford post-college life, Trummell said. "I really don't want to do that."
Why you should care about budgets
Putting together a post-college budget is crucial if you don't want to spend your way into serious problems. You're also developing a habit that can serve you well throughout your life.

"You're committing to managing your money instead of letting your money manage you," said economist Kathy McNally, head of financial literacy for the National Foundation for Credit Counseling. "The earlier you start, the better."

You'll probably find it helpful to first track how you're spending money now. Review one of your recent bank statements to get an idea of your current monthly expenses and your monthly take-home pay. Then track every dime you spend for the next three or four days to learn where your discretionary money goes. (For more, see our Managing Your Budget Decision Center.)

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