The key to building a sturdy budget, especially when one is just starting out and may not have a ton of wiggle room, is prioritizing what needs to be paid first. What is going to cause the most problems if you don’t pay it? Is the behemoth popcorn really necessary when you go to the movies? Even if it is, will you still be able to pay your rent?

To start your budget, first identify how much money you actually have. Include paychecks, tips, savings (if you want to), parental contributions and scholarships.

Second identify how much you need. Items in this category should be things that you have to have to survive (rent, bills, food, etc.). The need category should be fairly equal in terms of importance. However, depending on when they are due, and how often you get paid, you may have to choose which gets paid first. Remember, need and want are two very different things.

Finally, identify what you want. This can include saving for bigger items, putting aside a nest egg or going out with friends. This should also include your car, your pet, your cell phone, school and Internet. Your want category will take the most prioritizing. Everything here should be stuff you can live without, even if it makes your life a little more difficult. Believe it or not, you can live without your cell phone and home Internet access, and Fido will forgive you if you have to leave him at Mom and Dad’s house for a few years.

Example: Jane is a 21 year old student. She works about 25 hours a week in a bakery that pays $5 per hour. She also makes about $100 per week in tips. Jane’s parent’s send her $150 every month to help her pay for school. She also has a $2500 scholarship from her school. Jane’s total income per month is $750 plus her scholarship.

The rent for Jane’s apartment is $350 per month. Her apartment complex pays all utilities except electricity, which costs about $50 per month. Jane also pays $50 per month for internet and $35 per month for her cell phone. She budgets $100 per month for food and $25 per month for gas. She wants to buy a new computer which will cost her $200. Jane is saving $15 every month for it. Finally, Jane’s tuition is $3000 per semester, which she makes payments of $100 every month after her scholarship is taken out. Jane’s expenses total $625 per month.

This budget leaves Jane with $25 every month to do whatever she wants with. This is often referred to as “funny money.” Jane usually uses this money to go out with her friends, but sometimes she has not budget quite enough, and she has to use this $25 to buy extra gas or food.

Remember that if you are just starting out, it is okay to mess up. Budgeting takes practice. It’s helpful if you have a little money saved up, but it’s not necessary. If you include Saving as one of your expenses, it’s actually pretty easy to get a little money squirreled away in the bank. Be wary of impulse buys and expensive purchases. Be sure your bank account can take the hit. That awesome new computer won’t be so great when you get kicked out of your apartment for not paying rent.