Planning a budget is an important part of being a fiscally responsible college student, and with these simple steps, it can be easy!
Discuss Basic Financial Information
The first thing you’ll need to do when planning a budget in college is to gather some basic information. You will want to talk about this with your parents and any other family members who might be helping you out financially, as well as the financial aid department of your school when applicable.
When planning your budget you ultimately have two goals: to develop a strategy and tactic. This discussion serves as your strategy, meaning your current financial situation, goals, and overall money philosophy. Knowing this information will help you in the following step, creating your tactics, or plan to reach your financial goals.
Start with figuring out who is paying for your college education and how. Is there a savings account in your name? Will your parents be making payments to the school, and if so, how much per month? Will you be taking out loans? This can be very expensive and stick with you for years, even decades, so it is very important to research the options out there.
Work with your financial aid department to find out what sorts of scholarships, grants, and other benefits you qualify for. Try to be as specific as possible in these details so everyone involved knows what is expected from them and each thing you need has an estimated way of being paid for. Then determine the remaining cost and work out a payment plan between you, the school, and any other paying parties. Things like applying for FAFSA and filing your taxes properly (or being sure your parents file properly) can be very important when it comes to getting all the possible funds allotted to you by the federal and state governments. Know that if the numbers on your taxes change greatly, perhaps as the result of a raise or cutting of hours, your financial aid could be drastically affected.
Track Your Spending
Keeping a record of your spending is one of the quickest ways to develop an efficient personalized tactic. Planning a budget is significantly easier if you know exactly how much your regular spending is and where it gets spent. This can help you differentiate between needs and wants, prioritize, and plan your spending in advance for each month. Doing this will make managing your money significantly easier! Keep track of all your purchases in a checkbook, journal, or online banking account.
After measuring your spendings for a while, find your average monthly spendings and record them. If your current finances are different than those in the budget you are trying to create, simply estimate your spendings instead. Mark down how much you spend in categories such as “mandatory monthly payments”, “food”, and “entertainment”, overestimating how much money you actually require for each. Also include an “unusual expense” category to include fees such as car repairs, tickets home, or upcoming expensive events.
Be sure to include all college fees, such as tuition, textbooks, and cost of supplies as well as everyday living costs like rent, car insurance, a Netflix subscription, and your daily coffee. Ideally, when planning a budget you should have a section dedicated to paying back any loans and saving money for the future as well.
Compare Your Income To Your Budget
Now that you have an accurate idea of how much you will realistically need to spend each month, the next step in planning a budget is determining your monthly income, underestimating the number. By overestimating your spendings and underestimating your income, you are preparing for weeks when money may suddenly be tight and preventing the issue. Compare the two numbers; if your monthly spendings are greater than your income, you will need to reevaluate your budget. In this case, you will either need to find a supplemental income to make more money and/or cut back on unnecessary expenses when possible.
Cut Back Where You Can
When planning a budget that is a little tighter than you had hoped for, you will want to look at how you spend your money and where you can cut back. The first step to this process is differentiating between your needs and your wants. Rent, insurance, and basic groceries or a meal plan are all essentials that you must take care of each month. Include other necessary payments such as tuition or car payments in this category as well.
Next, take a look at all of your remaining spendings: these are your wants. Planning a budget requires prioritizing your list of wants and finding where you can save money. Instead of going out to eat three times a week, cut back to once a week. If you get Starbucks every morning, consider brewing your own coffee instead and only going out as an occasional treat; say, during group study sessions. If you pay for a variety of streaming services such as Netflix, Hulu, Amazon Video, HBO, or Youtube TV, try limiting yourself to one subscription or ask to split the price of an account with a family member or friend. If you have a roommate, perhaps you could even ask them!
Think In Advance
When it comes to shopping, you’ll want to pre-plan in order to avoid impulsive purchases. Make a list of basic groceries you will need to pick up regularly with room for rotating items. Pick out cheap, filing bulk foods like rice and pasta that you can add meat and fresh vegetables to. Planning meals in advance will prevent you from having a fridge full of groceries that don’t combine to make a single meal. Avoid going to the store while hungry and follow the list as best as you can.
If you are looking to make a larger purchase for yourself, be sure to comparison shop before buying anything. Sometimes prices of the same product can vary wildly depending on the site, so checking out more than one will let you get a better idea of how much you should realistically spend. The same applies for textbooks, which can be quite expensive depending on the college, professor, and class subject. Begin your search as early as possible since the price will go up closer to the start of the semester as demand increases. Some professors require physical hard copies of the textbook, but be sure to reach out to them to find out their policy before spending unnecessary money. There is a large collection of databases with PDFs of textbooks free for college students to access.
If you have a credit card or are eligible for one, use it to your benefit! Be sure to be smart with your spendings, as credit card debt can quickly get out of control if you are not careful. However, making small payments on your card such as your Netflix subscription and daily coffee, then paying the bill off in full each month can quickly build up your credit. Doing this is extremely beneficial for your future self, as getting loans or mortgages is incredibly difficult with poor or no credit. Additionally, some credit cards offer cash back options on certain purchases. This is a great way to put some extra money in your pocket or an opportunity to start a savings account for after college!
Other Ways To Save
Take advantage of student discounts! This is huge when planning a budget, as you will likely have to reduce your entertainment fund. Luckily, many museums, parks, and even restaurants offer student discounts, so be sure to ask around.
In addition, be sure to keep an eye out for free food being advertised and take advantage whenever possible! Many college groups will organize campus events such as movie nights, alumni reunions, presentations, and other activities with refreshments available. I have often found myself attending an informational meeting for the free pizza and leaving feeling glad with the knowledge I gained.
When you need new clothes, visit local thrift stores to pick up new styles at the fraction of the cost! Some colleges even offer their own free version of this exclusively for their students right on campus.
Lastly, unless you work a full-time job for several months in a row, be sure to stay on your parents’ insurance as long as you are legally allowed (25 years old in most states) if your parents are willing. This will make trying to figure out doctors’ appointments and emergency medical treatment less stressful and does not pose an immediate problem for either party involved.