- College budgeting will help ensure you don’t overspend and reach your goals later in life.
- Understanding, managing, and monitoring your expenses is critical to successful college and lifelong budgeting.
- Follow the 50/30/20 rule, which recommends spending 50% on essentials, 30% for wants, and 20 percent for savings.>
Psychology. Creative Writing. Archery. Your learning journey in college will allow you to explore new interests and subjects. But there’s an important subject you need to master early on in your college journey – College Student Budgeting 101. Sure, it’s not as exciting as film production or as interesting as oceanography, but it is one of the most important lessons you’ll need later in life.
Why college budgeting matters
There are so many good reasons to budget, especially now that you’re about to begin college and your journey to independence. College budgeting now can help you make the right financial decisions to ensure you don’t spend more than you can afford and leave college with “debt regret.”
It can also help you manage your expenses in school, so you won’t have to rely on others. And perhaps most importantly, knowing how to budget can help you achieve the goals you want later in life – whether it’s buying a car, having your own place, buying a home, or even getting married and starting a family. Whatever your personal goals, learning how to budget your money can help you achieve them.
Master your college student budget
The great thing about learning to budget in college is that it doesn’t take a lot to get started. You can do it with a pencil and paper or take advantage of apps that can do the math for you. Whatever way you do it, here are some college budgeting tips to help you:
What’s your income? You may have a part-time job that gives you a little money or have built-up savings that you can use for your expenses. Look at your income today and project what you expect to make in the short and medium term. Think about ways to increase your income without affecting your study time.
What are your expenses? Write them all down – everything from your cell phone bill to subscription services. Be sure to include money for food and entertainment. The best way to get a handle on your expenses is to start tracking them. Write down everything you spend for a month. To ensure you don’t forget anything, use your mobile banking app to check the activity in your bank account.
- Categorize your expenses. When you know all your expenses, start categorizing them by housing, food, utilities, loan payments, and entertainment. Also, include money you put aside to save (which hopefully you do). Next, break down those expenses into things you need and things that are nice to have. For example, you may love having five subscription services, but do you actually need them? Do you really need to buy pizza when dorm food is already paid for? Every little bit of savings helps.
- Know what you owe. If you have debt, including student loans and credit card bills, make sure you know how much you owe, the interest rate, and the term of your loan. This can help you determine if you could refinance debt like your student loans to get a lower interest rate that could help lower your monthly payment.
- Create a savings plan. We know it’s hard to save, especially when you’re in college and likely not making much money. Setting aside even a few dollars per week for savings will not only add up, but more importantly, get you in the lifetime habit of saving. This discipline pays dividends in the future.
- Monitor your budget. Once you create your budget, your work isn’t done. You need to constantly assess your expenses and income to ensure you don’t have a “lifestyle creep,” where your expenses start to overtake your income. This will also help you identify opportunities to lower your expenses and up your savings game.
- Adapt to lifestyle changes. You’ll also want to modify your budget when you experience lifestyle changes. For example, as you near the end of college, review your expenses and potential income when you get a job.
- Make a good spending plan. As you modify your budget, think of the 50/30/20 rule. Spend 50% on essentials like housing, food, utilities and 30 percent on wants (like those concert tickets), and 20 percent on savings (for future goals and unexpected expenses).
Budgeting in college and life is not always easy, but if you stay the course, you can build a foundation for success today that will pay off down the road.