One of the mistakes college students often make is that they fail to plan a budget. Many of them say that they don’t have enough money for a budget or they cannot make ends meet anyway so what is the use? But really they just answered the question because students who do not have any form of budget for their expenses and income are the ones who are struggling the most.
In this post, we will take a look at how students can plan their budget while they are in school and develop habits that can last a lifetime.
1. List all expenses. No matter how much something costs, all expenses for college including books, tuition, and many other expenses like uniforms or extra materials that you need for projects should all be included in this budget. It is probably a good idea to keep all school expenses in one category and everything else should be in a separate category. This is because much of your student aid has to be dedicated to school expenses only. However, if you have taken out a personal student loan you have more flexibility on how you use your money.
2. List all forms of income including student loans, parental help, small personal loans, federal loans, and all forms of student aid. If you have a part-time job, you will need to list this as well. It will all be figured into your total income that you will use for your budget every month.
3. Subtract your expenses from your total income. This is what you do with any budget not just a college budget. This will give you an idea of how much you have left after the main bills are paid and expenses accounted for.
4. List any miscellaneous expenses including gas, car upkeep, clothing, entertainment and so forth. Every expense needs to be counted to give you a true picture of what you need to make ends meet, while still having some spending money left over.
5. Subtract all of your expenses for school from your student loan amounts and subtract everything else from the remaining money that you will use to pay everything else. Whatever is left over is your available cash for the month. Even though you should plan a budget for a month, which is traditionally done in any budget and it’s a habit you’ll use throughout life, you need to keep up with all of your expenses every week. Even if you are not paid weekly, at least write down all expenses that you incur. Then you will start to see a pattern as to how you are spending money and learn to shift money around to the places that you need them to be.
Unless you know where your money is going, you cannot do anything to change it. It is within your power how you spend your money whether you realize it or not and what you spend your money on will result in how you live your life.
You should learn the difference between fixed and variable income and expenses. Fixed income is you get every week or month at the same amount. It is predictable, and it’s easier to plan a budget that way. Variable pay is better because you might get more money sometimes than others. However, it’s vital that you save as much as possible during the higher times so you’ll have enough for a rainy day.
Keep an extra change box, or separate savings account either online or in your dorm room for emergencies. Another good idea is to keep your budget and check it to estimate what your student loan would cost if you were to quit school now and start paying it back. That way it would never get out of hand, and you can keep track of your climbing debt.
If you get an excellent job opportunity before college is over, you may want to choose not to continue your education and take the job instead at least for a while as you make yourself more financially secure. Prioritization is the key to keeping a reasonable budget, and this is a skill that will last a lifetime.