Managing money in college can be a challenge, even for the most financially savvy students. If you’ve never handled your own money before, budgeting can seem overwhelming. As college students, it can be easy to lose track of your expenses. Prioritizing your spending is important for not only meeting your basic needs, but also balancing your academic, personal and social lives.
Learning how to budget your finances now can help you at college as well as later in life. Once you establish how to manage your money, you only need to make small adjustments as your income and spending habits change. Below are 5 simple steps to help you develop healthy financial habits for your college years and beyond!
The first step to building your budget is to take a look at your current income. While in college, you may be working a part-time job or have a paid internship that brings in money each month. Based on this income, you can set aside a certain amount of finances to spend and save.
- Fixed Expenses
Consider making a list of your fixed weekly, monthly and yearly expenses. Fixed expenses are expenses that need to be paid no matter what (generally a fixed amount). Figure out all of the things you know you’ll definitely have to pay for and record their costs as accurately as possible. This would include rent, groceries, textbooks, transportation, school supplies and utility bills. Set aside a portion of your income money for these essentials.
- Variable Expenses
These expenses are costs that can go towards entertainment purchases such as going out to dinner or buying a new item of clothing. This amount may change each month and can be adjusted based on your income and fixed expenses. Be realistic when calculating your variable expenses by setting aside a small portion each month.
One of the biggest reasons to manage your money is so that you can accumulate savings. You may want to save up for graduate school, a new car or an apartment. In order to maximize your savings, consider researching student discounts and coupons that you can take opportunity of. You may want to split subscription or membership costs with friends or a roommate. Knowing that you have savings reserved in case of an emergency will give you both future options as well as peace of mind.
Once you set your budget, test it out! Do a month-long trial run to make sure that you have accurately accounted for all of your expenses. Take note of any areas where you may have devoted too much or two little of your money. At the end of the month, tweak your plan to better fit your spending habits. If there’s ever a change in your income or an expense, make sure you adjust your budget accordingly to avoid any setbacks.