Budgeting Your Finances as a College Student
College is an exciting time for young people. They are discovering independence, expanding social circles, and preparing for their career. It’s also a very crucial time to learn budgeting and taking care of your finances if you haven’t learned it already. For you to focus on your studies instead of worrying about your funds, here are some tips to help you.
Create a Budget
Even if you’re not earning anything, it doesn’t mean that you don’t need to create a budget. You still need to estimate how much you will be spending and how much money goes into your pocket each month. Your “income” would include your allowance, savings, and part-time job income (if applicable). Learning how to manage these will help you make the most out of it and minimize unnecessary expenses.
A good way to start creating a budget is to list down on paper your monthly expenses and your money on hand. Even though you’re not yet starting college, it’s a good idea to estimate your expenses for college. When you get accepted in a university, you might have already started to read up on the cost of living in that area and if your school will provide living accommodations for you or not. This gives you a better perspective on your expenses and if you really need them or not.
Once you start college, you need to track your expenses on a daily basis. You can collect paper receipts or immediately list your expenses after spending. It might take some time to get used to this habit and even more self-discipline to stick to this routine, but it’s one of the basic skills for managing your budget.
Define Needs and Wants
Another thing that you need to work on is to know which of your expenses are solely based on wants and which expenses are a necessity for you. One specific example is gas money. If you’re spending more than $40 a week just for gas, you need to seriously consider if it is needed or if you can find ways to minimize it. In your area, it might be easier to use public transportation or even walk to your university.
On the other hand, buying groceries or food supplies are a definite necessity. Still, it’s easy to go overboard and buy expensive items just because you think it’s covered in your food expense. Even if it’s classified under a necessary expense, there are still options for you to save. For example, you can buy fresh produce and make your own food instead of eating in fast food restaurants all the time.
Limit Your Leisure Expense
Part of college is meeting new friends and establishing your social circles. In line with this, out-of-town trips or excursions are popular. Some people go on trips almost every weekend when they’re not partying with their friends. For you, these are good ways to get to know other people and forge friendships. On the financial side, these are classified as leisure expense and need to be minimized. Frequent partying or trips can be very costly and you’ll burn through your budget in no time.
Remember that you’re studying in the university to further your education and get a degree, not make friends only. That should keep your priorities straight and help you in making decisions.
Spend Time Wisely
Part of college is having lots of free time. Some people use these for spring breaks or just spending time with friends. If you’re concerned about your finances, you can use it to get a part-time job instead. This will put extra cash in your pocket and help defray your daily expenses. In addition to earning a bit on the side, the work experience (no matter how minor) will help you land a job in the future.
Being a tech-savvy person, there are a lot of ways you can use technology for your budget. You can make use of a spreadsheet to track your expenses and how much money you have left for the month. Knowing your allowable money to spend ensures that you don’t go overboard. There are also some phone applications that help track your expenses real time. This way you won’t be able to forget them if you choose to log them at the end of the day.
Set Goals for Yourself
It’s very tempting to buy the latest smart phone or that new bikini as soon as you have enough savings. For you to use your money wisely, try to make short and long term goals. Your short term goal can be that new piece of clothing you want, while a long term goal can be a new car or a new gadget. Knowing what you want to save your money for will help motivate you to keep a little of your money on the side. As a bonus, it feels really good (and guilt-free) when you buy your goal item.
Learn about Bank Auto Deposits
If you’re receiving money on a regular basis (allowance or salary) in your bank, ask the bank if they have an auto deposit option. This works by setting aside a fixed amount from your bank account at specific dates of the month. Let’s say that you earn money every 15th of the month. You can set your account to withdraw automatically $50 and put it in a separate savings account. This way you won’t need to worry about setting aside money and focus on budgeting the amount left. A lot of banks now offer this option, so it’s worth asking them if you’re eligible for this.
Experience is definitely the best teacher. This holds true when it comes to budgeting as well. Your friends and family members who have experienced university life might be able to give you some suggestions on what worked for them and what to avoid. Talking to other people and learning about their experience is much better than reading it on the internet whole day. They’ve already tried it and they definitely know what they’re talking about.
Keep Buying to a Minimum
When you’re excited to go to college, it’s easy to buy almost half of the furniture store. Keep in mind that you’ll be staying in an apartment or the college dorms. At most, 4 glasses or 4 pairs of utensils are enough. You won’t expect to host parties every night or have a lot of people staying with you. It’s even recommended to postpone your shopping until you know the space of your living accommodations. So you won’t spend too much and overbuy everything.
In addition, it’s also advisable to buy used textbooks. Books are one of the main necessities and major expenses when you go to school. However for college textbooks, chances are you won’t use them that much and you’ll read only a few chapters. This is one area where you can definitely save money by going for the cheaper alternatives and not spending excessively.
College can be a very new place for many people, especially freshmen. It’s one place to learn about independence at the same time preparing for your future career. Stick to these budgeting tips for college students and it just might make your college life enjoyable and fruitful.