Freedom! For most college students, this is the time that they start to get out on their own and start handling their own finances. Unfortunately, most college-aged people have almost no idea how to handle money. A mere 40% of student have ever even created a budget, much less stuck to it. If you can relate, read on for some stellar tips that will help you understand budgeting for college students.
1. Calculate Your Income
First, you need to know how much money you can count on. If you are paid a regular paycheck, this won’t be hard. But if you work hourly and your income varies, try to figure out the average. Always estimate on the low side just in case.
If you freelance, don’t forget to set aside money for taxes or you’ll have a nasty surprise when tax time rolls around.
2. Figure Out Your Expenses
Now, you look at all your expenses. Fixed expenses such as the Internet bill, insurance or loan payments, and monthly subscriptions are easy. Variable ones like gas and groceries can be more difficult. However, you can work out how much you generally spend on those items by keeping track for a few months.
Now you have to make sure your income can cover those expenses. If it doesn’t, you’ll either have to commit to working more hours or cut back on some of your expenses.
3. Understand a “Need” vs a “Want”
As you’re planning your budget, it’s very important to differentiate between “needs” and “wants”. You need to pay your electric bill; you want streaming services for entertainment. If you can’t balance your budget, it’s time to trim some of those wants.
4. Savings Is Really an Expense
Another thing to keep in mind is that you should treat your savings account as if it were an expense.
In other words, don’t just toss whatever money might be left over at the end of the month into your savings account. Make it a priority to put that money in there at the beginning. You never know when an emergency might arise, and you’ll need it. (Keep in mind that the newest video game or a super cute new pair of shoes don’t count as emergencies!)
5. Review and Recalculate
Once you create your budget, it doesn’t have to rigidly stay the same. Take some time periodically to evaluate it and reorganize. Your income or expenses might have changed, which will require you to recalculate and set up a modified budget accordingly.
Become a Budgeting for College Boss
Budgeting for college students typically doesn’t come naturally, nor is it easy. You’ll have to develop some organizational skills as well as learn a little self-discipline. However, once you get the basics down and make them a part of your routine, things will flow smoothly and you’ll never have to worry about coming up short at the end of the month.
Looking for more budgeting tips for college students? Don’t hesitate to check out more of our blogs!