Budgeting for College Students
Budgeting for college students can be a daunting task, especially if you have never had a job or managed your own finances before. Many college students end up social spending with their new friends; going out shopping, grabbing food together, and taking weekend trips together. If you don’t pay attention, you can run out of money very fast. So how do you enjoy your college experience and your new friends without being blindsided by your finances? Financial issues are some of the first that college students will face being away from home, but they can be avoided or tracked fairly easily, by simply making a budget for college. Here are a few good steps to take to create a college budget and take control of your finances.
Decide on a budgeting framework.
Understanding your parameters is an important first step in creating a budget for college. A simple excel spreadsheet is an excellent tool for this process. Consider your income and how often you get paid, and make sure to factor out income tax from your total income. Primarily, you need to focus on any bills that you are required to pay by a certain date and necessary expenses, such as food. A popular method is the 50-30-20 method, which dictates that one spends 50% of their income on needs, 30% of their income on wants, and 20% of their income on savings. For many college students, this is a bit unrealistic, as most college students do not make enough money to realistically divide their income this way.
A good method when budgeting for college students is to calculate how much money your needs will cost, subtract that from your monthly income, and then divide the leftover amount in half; half goes to savings, and half can be spent on non-essential items.
Keep yourself accountable.
Remember that while it is important to treat yourself occasionally, if you are consistently spending more than your budget allows, it may be necessary to re-evaluate what you consider a “need”. A big issue when budgeting for college students is sticking to the plan you’ve created for yourself. Remember why you created this budget in the first place.
Leave your savings alone.
Your savings are an important part of your budgeting process; you can decide what to use your savings for, but primarily, your savings should be used for emergencies. Extra money is a good thing to have when dealing with car problems, medical issues, or any unexpected charge.
Adjust your budget as needed.
Always remember to revisit your budget from time to time. Costs and income change over time, and you can adjust your spending accordingly. Your budget will not be perfectly to the letter, so you should spend slightly less than you think you need to. Every penny counts!
As your finances grow, your budget should grow with them, giving room for extra accounts, specifically for investing, vacation savings, and retirement savings. But for your college years, it is important to keep it simple! Organization makes your life much easier in the long run, so it’s important to make sure you understand the budgeting basics.
Enjoy today, but also plan for tomorrow.
Your college experience is a time unlike any other in your life. You are preparing for your future, and it can feel really overwhelming to study and work and budget your finances with no play. You should remember that you have worked hard for this money, and this period of your life should be enjoyed! Everything in life is about balance. Enjoy your college experience, but be realistic about your future income and the expenses to expect after college.
You are in charge of your life! College is a whole different ball game and you have so many new opportunities of which to take advantage. Enjoy your time, but be conscious of your future! Budgeting for college students is about finding your balance.