Create A Budget In College
Should I Create a Budget In College? – Absolutely, Learn How Here
If you don’t know how to create a budget, or haven’t been advised just how important it is to have one, then this article is for you. If this the first time that you are on your own, and you aren’t able to get a handle on the various school expenses, then you may find that college life may be difficult. Not being able to manage your money responsibly can cause financial difficulties, increased debt, and other concerns that you really don’t need to have.
You may be a very talented individual, especially in the field of study that you are pursuing, and college is expected to help you to take advantage of those talents. You need to expand your mind and learn to function as an independent and responsible adult. It’s very important that you are able to focus on your education, and at the same time, enjoy the social life and extracurricular activities while in college.
To accomplish that, you will need to create a budget that contains a flexible spending plan. That means your variable and fixed expenses must at least equal the financial resources that are available to you. Hopefully, for you, the resources will exceed the expenses.
However, it’s important that you create a budget that is not only realistic, but is flexible so that changes can be made if necessary. Creating a budget does not require a doctorate degree in math. As a matter of fact, that’s the easy part. Following your budget is another matter.
If this is your first budget, you’ll soon see what a challenge it can be. Once you have your budget created, remember, it’s not cast in concrete. If you missed an item or didn’t calculate enough, then you need to make a change.
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Do your very best to follow your budget or you may soon discover that your money is gone, and you’ve dug a hole for yourself that will cause additional stress. Generally, the category that causes the most problems when you create a budget are the discretionary expenses.
The best place to start to create a budget is to determine the amount of funds that you have available, and the expenses that are fixed for that school year. The fixed expenses shouldn’t vary.
Start listing the income sources such as a part time job, work study programs, and don’t forget money from mom and dad. If you’re fortunate enough to have income from a trust, be thankful. Also list any student loans, grants, or other forms of financial aid. Cash gifts also qualify.
Some examples of fixed expenses are tuition and related fees, plus room and board if you live on campus. If you are staying off campus, you will probably have rent and utilities. Added to this list of fixed expenses are also books, supplies, and equipment such as a laptop. If you have an auto loan, it will be in this category. Auto insurance and also medical insurance premiums will be a fixed expense, as well as your cell phone bill.
When you have completed the list of fixed expenses, subtract that total from the gross income to arrive at your disposable income. That remainder has to cover all variable expenses such as food, snacks, and other personal expenses, such as laundry, haircuts, etc. You will need to factor in social activities and recreation as well. Gas and maintenance for the car, plus any parking fees are included in these expenses also.
We hope that after covering the variable expenses, there will be discretionary income that should go to savings and/or an emergency fund to cover some future expense that is sure to pop up.
You need to track your spending carefully during this time to make certain that you are following your budget. We recommend to our clients that they purchase a good personal budget software program that will make it so much easier to get a handle on all of those expenses.
This program will guide you every step of the way and will teach you how to properly maintain a budget. Most importantly, it will also teach you to eliminate debt as quickly as possible, especially credit cards that can lead you into a difficult financial situation quickly. You should have a good idea after you finish your first or second semester, of how much is needed in each category, and where you can make changes to adjust.
Don’t forget to keep track of all of your spending, and take the matter of budgeting seriously. When you create a budget, you can’t afford to fail. There’s no re-taking that test!
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13 responses to “Create A Budget In College”
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I don’t care what anyone says, knowing how to manage your money is a very important skill. You’ll be dealing with money a lot for your entire life so you better know what you’re doing with it, just like anything else.
I agree. It’s important to do at any age. I wish I had done more of it as a kid… even like 10 bucks a week. That certainly adds up!
Sound advice:) I wish someone would have told that to me when I was in college! I ended up making some huge mistakes (like getting into credit card debt) which I paid for well into my thirties. Starting with a budget and managing your finances should be taught young. We will be working with my son and hopefully he won’t make the same mistakes that we did as young adults.
That is the best advice I have seen on not only making a budget but also how to follow it. I wish I would have had this when I was in college the first time but you can bet I will use it when I go back for my masters.
Good advice, but I’d say that even earlier, especially these days, would be better. I see so many parents who just buy their kids whatever they want throughout middle school and high school, and then the kids are clueless when they get into college and often make horrible financial mistakes. I think the old way of giving kids an allowance and telling them that they’re on their own from there taught us how to be more responsible in the long run.
Very good advice. I feel that financial planning should be a required course in any educational system. So many young people get into trouble with money and need bailed out.
Good Lord, I’m 40 years old and I am still paying off student debt that went R9 when I was 25. I come from a family of ‘spenders’ who lived in the moment. Saving was not in our vocabulary, and ‘budget’ was a four letter word. Love my family, but they did me a major disservice!
I am very much agreeing with this article. Managing your money, especially when dealing with student loans, is extremely important. Overspending is a bad thing, so being prepared is very helpful.
Oh this is depressing. I know we have to not get in debt and all that, but where’s the fun in being young?? Bills and budgeting and saving – I’ll be doing that the whole rest of my life, I just want to hang out and enjoy going out with friends on my days off. I work hard and I go to college – and I deserve to spend my money in enjoying the weekends. Right?
You might want to find some way to have fun that doesn’t involve spending money. If you’re not careful, credit card debt can creep up on you and then the day of reckoning arrives. In high school and college, we’re supposed to learn how to be responsible adults.
I am currently studying in university, I understand how important it is to have a budget.
I am currently having quite a bit of debt, thanks to irresponsible spendings.
When you are in the college, you must have a realistic budget.
Managing money is very essential especially when it comes to student loan. Spending money on unnecessary things should be averted as much as possible to enhance savings. This post was very helpful.
Though I took out student loans, I was real smart in college and created money market accounts and specialty savings… for safety. It worked and now I have a solid start to my retirement.