Want to get your student loans paid off faster? Would you like to retire a bit earlier?
What if I told you there was an easy step you could take right now that would help you accomplish those goals?
These questions may sound like the beginning of an infomercial or recruitment for a pyramid scheme, but getting into the simple habit of making a budget is both easy and can have lasting substantial benefits.
To those who have never made a budget, it seems like a silly exercise. For years, I felt this way.
I’ve always considered myself someone who was responsible with money. I don’t buy extravagant or unnecessary things. I live within my means, and I try to only spend when necessary. When you live that way, budgeting seems like a waste.
Sticking to a reasonable budget for a long time is a good way to save a ton of money.
Even if you aren’t already living a frugal lifestyle, budgeting can seem silly. Writing numbers done on paper or typing into a computer doesn’t actually save money.
The benefit to a budget comes from the subtle change in mindset. If you discover that a significant portion of your income is spent on a cell phone plan, rental agreement, and protection plan, you might decide that the latest iPhone isn’t really a necessity. Seeing how much money was spent each month at Starbucks might make home brewing a little more appealing.
When we spend money, we are making a statement about our priorities whether we like it or not. There is nothing wrong with eating out and spending money to go to the bar with friends. There is real value to that and, for many, it is money well spent.
However, at a certain point the luxuries and treats we buy for ourselves add up. Is top shelf liquor more of a priority or is saving for a vacation a bigger priority? Where do your retirement goals fit in? How soon do you want to be free of student loans?
The budget answers all these questions. Those of us that don’t have unlimited incomes need to prioritize the finite resource that is our income. A budget helps us set aside money for the things that matter.
Don’t get carried away
There is always the temptation to pinch every single penny, but in the long run that can be a mistake.
The most important characteristic in any budget is that it be sustainable. Sticking to a really strict budget for one month is a good way to save a bit of money. Sticking to a reasonable budget for a long time is a good way to save a ton of money.
Don’t be the person who shows up at the gym on January 1st at 6 a.m. and works out every day for the next week at the same time for 3 hours. That is an impressive week, but if you are back on the couch by February, you haven’t accomplished much.
Budgeting for law students
Most law students are not exactly burdened with a ton of extra cash each month. Even those who are already spending at bare bones levels can benefit from budgeting. If nothing else, it is a great habit to get started.
As a law student, it is also a great time to start saving money for the bar. The classes are expensive, and “bar study loans” have awful terms and worse interest rates. Saving up to fund bar expenses without taking on additional debt is an excellent first goal for your first budget.