So you're finally going to college! Woo-hoo! Are you excited? What are the things you are looking forward to?
Aside from the fact that you can now do whatever you want, meet new people, places, and experiences, the freedom that college brings may also place you in a different situation.
Every college experience is unique. Mine was full of burning midnight candles and empty wallets. However, I can pretty much say that I'd still able to make it through and enjoy the freedom and enjoyment of a uni-life.
Budgeting was an alien word for me back then. I wasn't financially literate enough that I'd rather spend my allowances on eating out, projects, treats, and goodies.
Ultimately, I was plain broke. If it weren't for my parent's support and scholarship grants that I was fortunate to have, I don't know how I would make it pass through college.
Also, I thought budgeting was a pure restriction. I have zero savings goals, and I was just keeping the money because I might need it one day. It wasn't apparent to me back then; it's like I was blindly saving for nothing.
And so I ended up losing all my money and wondering what went wrong. But, enough about me! I'm educating myself about finances and a bit wiser now to share with you from experience. Besides, maybe I could share things I wish I knew when I was in college too? 🙂
In this post, let's talk about budgeting in college and how do you make one so you can never go broke.
In other words, making and living on a budget or otherwise, gaining as little debt while still having fun in college.
Let's begin!
Why you need a budget?
The Student Loan Debt is now the second-highest consumer debt category after mortgage debt. It is also a little less high than credit cards and auto loans.
This year 2021, the latest student loan debt statistics show that 45 million borrowers collectively owe nearly $1.7 trillion in student loan debt in the U.S.
What's with all the data?
If you're in college, you've probably decided to move to school dormitories or off-campus. Of course, you're looking forward to all the fun parts of living on your own. (I was lucky enough to stay at my parents, rent-free- so it eased the pain, plus my university was nearby)
However, do you want to add yourself to the increasing high stats for student debts/loans? Has it ever occurred to you how to deal with it?
If you want to prove to yourself and everyone else that you are a real mature and responsible adult, you should learn how to manage your finances first.
Managing your money is one of the biggest responsibilities any young adult will have. Besides, personal finance isn't something that's already taught at school. It's not like someone is born knowing it already! You do really have to learn and master this awesome skill.
During my college days, I told myself that I will only start saving money once I enter the workforce. It was challenging for me because I have no idea how to manage money even though I am studying business! Plus, I thought it would be more fun since once I started to work, it's my hard-earned money; I'll have some senses knock on me, and I will begin to handle it wisely.
Turns out, I should start budgeting even before! It's simple and easy, something I neglected and took for granted in the past.
But, don't worry! I'm a changed person now! I may not be a financial expert (but I'm working towards it currently), but I can offer you unique insights on every finance-related issue you have in life!
So, let's start with how to budget as a college student? Read more below.
How to create a budget as a college student?
How to budget as a college student, you may ask? Here's how.
1. Assess your financial situation.
Indeed, it's hard for a full-time college student to work enough to leave college without loans.
Therefore, in the beginning, find out who will sponsor your studies. Will your parents support you? How about available grants and scholarships? Talk to your family about your current situation or desire to enter college.
You may feel awkward, but remember it's your future we're talking about here. Be open to your opinions and thoughts and try to understand your parent's side as well.
I know that educational background is not the sole definition of whether you will succeed in life or not. Some people are earning six-figure incomes even without a degree.
However, when you finished that degree, there are still advantages, especially when you want to work on huge corporation chains or target a career/job position. Keep in mind that we're all in the same vast ocean, but we're sailing on different boats in different directions.
So, know what you want and start making decisions like an adult.
2. Plan ahead and calculate your net income.
Budgeting is straightforward. The rule of thumb is that expenses < income.
In terms of income, these could be your:
- Savings,
- The money you make from your job during the semester or part-time job,
- Allowances from your family,
- Money from student loans
When you add all this money together, that is your income. If you're the old school type, you can manually use pen and paper to write all your income sources.
On the other hand, if you're the tech-savvy one, spreadsheets or digital apps will be your best friend. The goal here is that you must be aware of where all your money is coming from.
3. List all expenses.
There you go, expenses! On the other side of your column in your spreadsheet or written budgeting plan, list all any costs you most probably will have to get aware of. You must also include anything that you can think of.
Afterward, it's time to break down all these expenses into two broad categories.
4. Classify expenses into subcategories such as fixed and variable or living and educational.
This is a crucial step on how to budget as a college student.
Fixed expenses are the ones you have to pay every month with a constant amount. In contrast, Variable expenses are the ones that vary depending on how much you make each month.
Think of it as a pyramid. On the base of it, shall your fixed expenses go. This means that they are your priorities or basic needs to survive.
For instance, tuition, rent, utilities, insurance and transportation, house, school supplies, food- all are examples of fixed expenses.
In the “Hierarchy of Needs” by Abraham Maslow, the base must be covered so that a person can move up to the ladder and fulfill other needs.
The same logic applies here. Once the fixed expenses at the bottom of the pyramid are covered, you can now move up to the pyramid to spend money on variable costs.
For example, eating out, partying, concerts, sporting events, or new clothes- these can be your variable expenses.
Another categorization you might find helpfull is living vs. educational.
| Living Expenses | Educational Expenses |
| Rent | Tuition |
| Transport | School supplies |
| Food | Projects, papers, etc. |
5. Offset expenses against income.
When you have finished thinking and listing all the things you need and want, it's time to take your income and allot it to different bricks of the imaginary pyramid.
Essentially, making your budget. After tallying your income and expenses, deduct the expenses from the income. Whatever amount is left, you can put in different variable expenses depending on your thing. (You can also dedicate it towards your savings goal or funds! much better)
For instance, if you like shopping a lot, you might have to put less money towards eating out.
See what budgeting does? It's about finding out the audit trail and making room for some things you can let go of to make way for something you value the most.
6. Make adjustments.
If you're like me, I always lose track of every financial transaction I made; hence, I made room for adjustments.
These are amounts and receipts I forgot to, things I forgot to log on to my budgeting app, etc. Moreover, these may be amounts unaccounted for if you often have loose change.
Don't get discouraged. Whatever amount will be left after you budget or deduct your total expenses from your overall income; whether small, big, or negative amount, you can make a sound decision starting from there.
7. Keep track.
Speaking of which, you must keep track and follow your budget. This is a hard one, but I know you can do it.
You must track all your expenses- even the thinnest, tiniest bit, all of them. You'll be blown by surprise once you see how the little ones add up.
Moreover, an expense tracker or app might be thoroughly valuable especially if you're the forgetful type.
As each month goes on, always check and make sure you're not over budgeting or overspending. If you do, cut back expenses on that category or reduce it. You can also lower your allotted budget in another area, thus, making adjustments.
Budgeting is a very crucial task not only applicable to college students alike but for everyone. It's because it helps you control your spending, so you don't run out of money to pay for far more essential things.
Starting to budget while in college helps you prepare to make intelligent financial decisions once you step out of the real world. Furthermore, lessening your debt while enjoying college will make you feel truly free, not to mention improving your credit score.
Practical Tips To Save Money While in College
Food & Groceries  |
|
Housing  |
|
Transportation  |
|
Tuition Fees  |
|
Textbooks & School Supplies  |
|
Coffee  | Become an at-home barista at no time! There are dozens of coffee shops around campus which is tempting to go into. Coffees are around $4 a cup. Let's say you go around 3x a week, that is $50 a month spending in coffee alone! Buy coffee maker and make your own coffee at home or dorm. |
Entertainment  |
|
See? There are so many smart and creative ways to stretch that dollar while still having fun in college! In addition to that, here's more.
Be in an auto-pilot mode.
Whenever you receive your income or any money, don't forget to pay yourself first. Set aside at least 10%-20% of your allowance money and keep it in your savings jar. Or, if you are saving for a big trip or a new gadget, set up a separate fund for it.
It would be best to have a separate savings account set into an auto-pilot mode so that you won't forget to save. Technology does it for you.
Use apps like Money lover or budgeting apps such as Mint. You can also find tons of savings and budgeting templates or excel sheets online. It won't hurt to start from there!
Although we all have different approaches when it comes to our finances, eventually, you can find your way too and do it comfortably even when your eyes are closed! The best time is to start now!
Credit cards
As much as possible, you should avoid debts at all costs! Educate yourself about the difference between debit vs. credit cards.
College students are usually the target market of various banks that offers excellent credit card deals, low interest or no maintaining balance account opening, etc. If you don't trust yourself when it comes to spending, please don't.
You will just put yourself in so much trouble if you allow yourself to get locked and loaded this early with debts.
However, if you think you can handle it and have a good motive for using it, remember not to spend over 20%. Familiarize yourself with the proper credit utilization ratio. After all, credit cards are an excellent way to build your credit score, especially when the time comes you need bank financing or assistance.
If you're a good payer, you can quickly get approved for financial assistance. Otherwise, you may be put into the bank's negative database of delinquent payers.
That's freaking stressful! Imagine wasting youth!
Always remember that credit cards aren't free money. If you can wait until you graduate and have a stable monthly income to get a credit card.
Related:
Take advantage of free resources, student discounts, etc.
What I love about going to college is that the possibilities are limitless! This is one thing I wish I knew back then!
If you're in college, make the most out of free passes, student discounts, available resources, and so much more!
Just to share with you, I applied for a scholarship grant in college (thanks to the benefits of academic excellence in high school), and it did really helped in lessening our household expenses. I know my parents won't have enough funds. That's why I vow to myself that I will keep that maintaining scholar grade so that, at least, I am simply helping our family.
I am thankful enough that I lived in their house, so the academic scholarship is really my thing. It keeps me motivated to do better at school.
As much as I love books, I use the campus library for our textbook requirements; it saved me money.
Looking back, most of my money goes toward food and entertainment. If I knew back then how to control eating out spending, but oh well! Let's charge it to experience!
My college buddies were also a great company. We rarely spend money on extravagance entertainment, but when we do, oh boy! That's another story.
Increase your cash flow
The next best thing to saving is making more money. While in college, try to increase your cash flow.
There are so many odd jobs that you can do during your spare time. For instance, you can even apply within your school residence to pick up some part-time or paid internship.
Mine was tutoring high schoolers. It was fun, and the pay is not that high, but at the time, it was more than enough for me.
I was an English tutor for at least six months before I quit to focus on my studies. It was also a game of time management!
Another way to make money while in college is to sell your unused tech or supplies. List them on eBay or Facebook marketplace. The money you made from the sale can be significant start-up savings.
Read more:
- 21 Legit Online Jobs To Make Extra Money As A College Student
- 27 Legit Ways To Make Quick $300 In A Day
Invest
Did you know that you can invest your money even while still studying in college? Yes!
Today, there are numerous robo-advisor apps and online investing platforms that you can use to park your money and let it grow.
Investing- this is also one of the things I wish I knew back then. With the money I have possessed a few years backs, I wonder what will happen if I started investing back then!
Too much wishful thinking!
Further reading:
Treat yourself
Most importantly, don't forget to enjoy college.
Come on, have fun! Work towards having “fun money” where you can spend it on whatever you want.
What I can share is to save for expenses you truly desire or want.
Remember, we're not here to judge nor restrict you. You can still enjoy college with fewer debts and being more financially literate.
How much does a college student need per month?
It varies per person, and a few factors to consider. You should also note that it also depends on how an individual handles his money.
But, the average amount is about $2,000 yearly or $200 a month. Do you think you can live with that?
What is a good budget for a college student?
A reasonable budget for a college student is one that is straightforward and can ultimately open their eyes towards their spending behavior and expenses.
A straightforward way is to remember to keep expenses less than your income, plus spend in moderation.
For instance, here's a budgeting template you might find helpful. From there, you can modify it and customize your own according to your needs and wants.
How to deal with student loans and debts?
First of all, get clear about your reasons why you're borrowing money. If you have ample cash to pay for it, why not use it instead? Most significantly, when you're using cash, you tend to feel the tangible loss of money.
Therefore, you'll be awakened to get a grip of all that swipe left and right. Tip: Leave your credit cards at home!
Aside from that, learn about value-based budgeting. It's more on intentional savings and splurging money within reason.
Assess whether you need or only want an item. Wait for at least thirty days before buying it and see for yourself the difference it could make.
Final thoughts
Above all, I wish I knew then what I know now.
The importance of personal finance is not only applicable while in college; you bring it with you all your life. Most significantly, once you step out of the real world.
Keep in mind to still be gentle and have fun. College is a great time to explore and learn about anything, most especially about money.
Trim your expenses if you're always short of money, keep on finding ways to stretch that dollar, and always make room for more opportunities and experiences.
While in college, this could be a perfect time to grow and developed to become the mature, responsible, strong, independent adult you were born to be.
So, go to school, and don’t be a fool. Keep more dollars in your wallet this semester, and don't be young, dumb, and broke!
Do you have other suggestions on how to budget as a college student? Share your stories below! Let's continue to spread financial literacy to the youth!
0 Comments