College student budgeting 101
So you’re off to college, the final frontier before “true” adulthood. You’re starting a new chapter and facing new challenges — like keeping track of your finances, for one. For most people, college is the first time you have to handle your own spending and expenses (semi-terrifying, we know). Managing a budget doesn’t have to be a huge challenge, however. There are just a few things you need to know to manage your finances like a pro.
What’s a budget?
A budget is how you keep track of your finances. There are two very important words you need to know for this: income and expenses. Income is the money you have coming your way, whether it’s from your parents, a part-time job, or wherever else. Where that money gets spent makes up your expenses. Got that? You’re 90 percent of the way there.
Why should I keep a budget?
If you paid attention in third grade math, then you probably know that your income needs to be greater than your expenses (unless you have a money tree growing out back). Otherwise, you’ll have zero dollars, which is not an amount anyone wants to have. It’s important to know exactly where your money is going. You can use a budget to plan for expenses so that your account never gets into the red. And creating good money habits in your college years will help keep your finances on track for the rest of your life.
How do I make a budget?
You can easily create a budget using a template in an Excel document or an app such as Mint. Both are great ways to get started. If overspending is a problem for you, check out apps such as Left to Spend (inside your app store) that will track your daily allowance for you. Use whatever works for you, whether it’s good old-fashioned pen and paper or the latest app.
How do I start budgeting?
First, calculate your income. Figure out how much money you have going into your account each month. Then, calculate your expenses. Start with fixed costs, such as tuition, rent, parking and utilities. After that’s all mapped out, track your variable spending and find out exactly how much money you dish out on the things that vary from day to day, such as groceries, travel, movies, gummy bears, etc.
If your income is greater than your expenses, you’re golden.
But don’t think you can spend your dough all willy-nilly just because you’ve got room to spare. If you have leftover income at the end of the month, consider making “savings” one of your fixed costs. Put aside a little bit every month to save up for a bigger purchase or start investing in your retirement. Your future self will appreciate it.
If your expenses are greater than your income, then it’s time to make some changes.
This could go one of two ways. Either your income needs to go up (e.g., get a part-time job, look for scholarships, etc.), or your expenses need to go down (e.g., move to a cheaper apartment, avoid any purchases that aren’t necessary, spend less money on going out to eat [ramen noodles, anyone?]).
Where do I go from here?
Once you’ve gotten your budget in working order, you’ll want to update it every month. Keep tracking your expenses and make sure you don’t overspend. As long as your finances are adding up, it’s okay to splurge on that gourmet iced coffee every once and a while. An easy way to track expenses is to check your online bank accounts for a minute a day to keep an eye on your spending and make sure there’s no fraudulent activity, which is another topic for another post that you can find here.