Budget Busters

creating a budget

BIG Ideas:

  • A budget can help you meet your monthly bills and prepare for unexpected expenses.
  • Making impulse purchases and using credit cards to pay for things you can’t afford can lead to struggles and poor financial habits.
  • Staying on top of your expenses and cash flow and making ongoing adjustments to your budget can ensure budgeting success.

You made a smart move when you decided to go to college.

You’ve given yourself a unique opportunity to develop new skills and knowledge and earn a degree that can lead to greater career opportunities, higher earning potential, and ultimately, a better financial life.

But when you’re in college and living on a limited budget, it can be hard to see a light at the end of the financial tunnel.

Sure, you may have work study, a part-time job, an allowance from your parents, or some savings set aside for the semester, but you still need to manage your money wisely to ensure you don’t run out.

There’s a solution that can help you, not just in college but throughout your life: budgeting.

Budgeting is essential to ensuring you have enough cash to pay your monthly bills and meet unexpected expenses. It can also help you reduce stress and sleep better at night. Who doesn’t like the sound of that?

Beware of Budget Busters

To successfully manage your money in college, though, you need to be aware of these common pitfalls that can throw a budget under the bus:

  • Impulse shopping. Ever feel sad, stressed, or homesick and decide you need retail therapy? That’s a perfect storm for impulse buying, where you buy things you don’t need or can’t afford.

    If there’s something you really want or need to buy, make saving for it part of your monthly budget. Remember the gratification for purchasing something you can’t afford usually ends when you start paying for it.
  • Ordering takeout/eating out. It’s so easy to eat out or order in today. Plus, it can be a nice break from dining hall meatloaf or making dinner every night. But dining out and ordering takeout, especially when you use expensive delivery services, can add up quickly. Cook in your dorm or apartment, use your meal plan, and pick up your food when you do order takeout.
  • Paying for multiple subscription services. Who doesn’t like to listen to their favorite music or podcast on demand or binge-watch popular shows? Subscription services make it possible and seem pretty cheap when they only cost $10, $15, or $20 a month.

    But those streaming services and other subscriptions can really add up. Look at your subscription spending and try to cut it down or split the costs with your roomies.
  • Using credit cards. Having a credit card in college can be a great way to manage emergency expenses and build your credit score.

    But relying on credit cards to pay the bills or fund impulse or other purchases you can’t afford will only lead to more problems like mounting credit card debt. There’s an old saying: If you can’t afford to buy something with cash, don’t buy it.
  • Not having savings. Emergency expenses happen, such as medical bills or computer or car repairs. Having an emergency savings fund can help you rest easier.

Tips for Budgeting Success

In addition to being aware of budget busters, there are some other steps you can take to help you build a budget and ace personal financial management:

  • Know your cash flow. Get out your bank statements or use your mobile banking and record your expenses for the last two months. Be sure to account for every expense in a month.

    Next, add up any money you have coming in from work study, a part-time job, money from your parents, or financial aid. Then, subtract your expenses from your income. This is the amount of available cash flow.
  • Categorize your spending. Once you know your expenses, categorize them into “needs” (such as food, housing, utilities) versus “wants” (takeout, streaming services, road trips). As you make your list, see what you can cut out.
  • Create and track your budget. Use a budgeting app or a spreadsheet to allocate money for each spending category. Then, analyze your budgeted vs. actual spending each month and make adjustments.
  • Build a savings safety net. When you make up your budget, include savings as an expense and make regular contributions to your savings account. You’ll be surprised how quickly the money will add up.

As you can see, budgeting money in college isn’t rocket science. But with some discipline and commitment, you can develop good spending habits to launch the secure financial future you want. 

Brazos is Here to Help Make College Affordable

For more than 40 years, Brazos Higher Education has been helping make education more affordable for students. As a Texas non-profit, we offer great rates and no fees on private student loans to help you save money. Contact us to learn more.