Avoid costly overdrafts by balancing your budget

Anthony Holloway

Listen to associate finance professor Ron Stolle’s advice for setting up a budget.

Listen to Stolle talk about how to maintain a budget.

With no money trees in sight and expenses to be paid, students face the need of financial organization, which takes the shape of a budget, said Ron Stolle, associate finance professor.

He said the big problem is when the overspending occurs.

“If you spend more than you take in, you’ve got a problem,” Stolle said. “Then you start using credit to bail yourself out, and if you’re not tracking that you just constantly get in the cycle of debt to live on. That’s how people get in trouble.”

Stolle said a budget is essential to knowing what money is available.

“The budget is the document that allows people to say, ‘Here is what I’m taking in; here is what I’m spending,'” he said. “Until people put it down in writing, most people don’t have a clue.”

Junior nursing major Rachel Levy learned about budgeting through experience.

“I had a five-cent overdraft that cost me $100,” Levy said. “It was like a pack of gum or something I bought for a dollar.”

Chris Raybuck, freshman physical education major, said it’s easy to lose track of spending.

“Sometimes if I’m lazy and don’t put (money) in the bank, I’ll just leave it in a room,” Raybuck said. “And before I know it, I’m getting something.”

He said he remembers one time when it allowed him to splurge.

“I like concerts,” he said. “One time, when I had some extra money, I went to Giant Eagle and bought some tickets to Rascal Flatts and Brad Paisley.”

Starting a Budget

Stolle said he suggests using a spreadsheet when building a first budget.

After opening a spreadsheet document, he said the following items could be added to the list:

• Income – any money coming from a job, scholarships and grants, trust funds, et cetera

• Expenses – rent, car payments, credit cards, utilities, cell phone, Internet, cable, food, entertainment

Stolle said the next thing to look at is to see how much money you have or make versus how much you spend.

“If it comes out that you’re spending more than you take in,” he said, “then you have a deficit and you have a problem.”

If students have a deficit, he said the next thing to do is to identify the variable expenses in a budget or the costs that can be adjusted like entertainment or food.

Levy said it is about having control.

“I tell myself no,” she said.

Sticking to it

Stolle said the key to sticking to a budget is getting it into your routine.

“You can get in the routine if you just look at the budget twice a month,” he said. “Looking at your budget will also remind you of bills you have to pay.”

Stolle said small purchases could also have an effect over time.

“It’s the small things that usually sink a budget,” he said. “The things people usually don’t think about.”

Levy said she sticks to her budget by differentiating her needs vs. her wants and by using a free online budget Web site called Yodlee.com.

And she gives herself some guilt-free spending money.

“I always give myself $30 of play money for every two weeks to spend on stupid stuff,” Levy said.

Contact student finance reporter Anthony Holloway at [email protected].