Right now I have a fairly simple life, being a college student with not a whole lot of expenses. So far I haven't been keeping track of my expenses, but I plan to starting 2007. For example, right now I couldn't tell you how much money I spend on food in the last month.

So far I've been paying for my tuition, room and board, cafeteria account in one lump sum at the beginning of the school year and so far I've been able to stay away from student loans. Not sure how much longer I can keep this up, but we'll see.

So far my budgeting system consisted of calculating my income for a two-week period, and I calculate all my expenses until my next paycheck. I always pay myself first though. I put roughly 13% of my gross income into an IRA. All the rest are then spent on bills, etc. Whatever is left over I apply as extra principal towards my car loan. I usually work out a plan for 2 months at a time.

Other than the fact that I have no good way of tracking expenses, which I'm planning on fixing very soon, what are the drawbacks of budgeting the way I do?

 

I see nothing wrong with your budgeting system as it stands. The fact that you are making your maximum contribution to tax deferred savings and doing it so early in life puts you in probably the upper 5%. Most people spend everything and save nothing.

There is no harm in doing a detailed budget but you may not find the rewards worth the effort. As long as you aren't finding yourself coming up short with what you have I doubt you'll gain anything. KISS is the key to having a budget that works. The more complex it becomes the less useful it is.

At your age the most important thing to do is put some away and stay the hell away from credit cards. Use debt and don't be tempted to borrow today and pay tomorrow. If you can emerge from school with non debt and a decent amount of money invested you are so far ahead of the game you have no idea.

Good job!

 

I use credit cards for everything. I get 1-5% cash back and always pay the balance in full.

 

I mean credit card debt. Among students (and most people really) credit card use and credit card debt are synonymous.

 

What is your job?

 

its a great idea to keep track of your spendings. there is no right or wrong way of doing it. but there are tools available for people to make it easier.

if you have a wells fargo bank in your state, i highly suggest you open a wells fargo account. i will tell you why.

wells fargo's online banking has one of the most, if not the most advanced online banking system (called my spending report). every purchase, withdraws, payments you make is categorized and broken down. it tells you how much you spent on food, entertainment, groceries, ect... no other bank that i know of gives you anything close to it.

yes, i do work for wells fargo . feel free to pm me with any questions. if i dont know the answer, i can find the answer for you.

 

Who are you asking?

 

I'd say you're way ahead of the curve, especially for your age.

 

If you're asking me, I'm a full-time student studying computer science and I work part-time (30 hours per week) as an assistant to the computer operations manager at a call center.

 

Unfortunately this wouldn't be too useful for me, since all my purchases are done with a credit card. The only thing that I use my bank account for is to pay my credit card, automatic deposit, fund my investment account, etc.