College life can get expensive – you’ve got tuition and fees, books, room and board, plus food, utilities, clothing and more. Many students are shocked when they find themselves suddenly paying for all the things their parents paid for at home. It’s one of the biggest adjustments that students have to make.
It’s not uncommon for college students to find themselves running out of money, and fast. Fortunately, there’s an easy way to fix this problem: make a budget.
What is a budget?
A budget is an invaluable tool for not only tracking your expenses, but also for ensuring that you don’t spend too much money. It can give you peace of mind when it comes to your finances because you’ll know exactly how much money you can spend on – say, fast food – while still being able to pay your rent.
So, basically, a budget is a list of what you spend your money on and how much you’re going to spend. It’s a guideline for you to use.
Why do I need a budget?
This is a fair question, and there are plenty of people who never use a budget. It’s a good bet, though, that those people struggle with money more than they need to. In fact, they probably feel more financial stress, have less savings, and more debt than they would if they used a budget.
That’s because a budget is the only way for you to know how much you actually spend and what you’re really spending your money on. People tend to underestimate how much money they spend on unnecessary things. In fact, once you actually sit down and track how much money you spend on things, we can pretty much guarantee that you’ll be surprised at how much you spend at your favorite restaurants or on entertainment.
Once you know how much you’re spending on things you don’t need, you can start adjusting your spending habits to better match your income.
How to create a budget.
Making a budget is relatively easy. You just need to know what your income is, what your expenses are, and what your expenses should be. So, the first step is to look at your most recent bank statement. This will show you how much money you deposited and how much you spent. It will also list each transaction, showing you not only how much money you spent, but where and how you spent it.
We should also point out that most banks now have a function on their websites or apps that can give you a clear breakdown of how you’ve spent your money, sorting your transactions into categories like groceries, utilities, restaurants or entertainment.
This is a HUGE help because bank statements aren’t always easy to read when you’re trying to identify each individual transaction.
Often the businesses listed for each transaction are identified by a numerical code or an abbreviation, rather than the name you see on the sign above their door. This is especially true when you shop online.
Once you know your monthly income and what your expenses were, you need to figure out what your expenses should be.
Start with any major expenses like rent, utilities and groceries, plus any of the school-related expenses you’re responsible for paying. These are the priorities, and you must ensure that you have enough money to pay for these things.
That might mean you have to adjust your spending elsewhere. You may need to eat out less often or dial back your social life a bit. It’s a good idea, once you have your main expenses figured out, to plan in advance how much you’ll spend at restaurants, movie theaters, etc. The trick is, once you decide on that amount, don’t spend more than you’ve budgeted for.
Easy ways for college students to save money.
As you work on your budget, you may find yourself struggling to figure out how to cut your expenses back. Luckily, here are some ways college students can dramatically cut their expenses.
Don’t buy textbooks.
An easy way to spot the freshmen on a college campus is that they’re usually the only ones buying their textbooks at the campus bookstore. Upperclassmen have often learned the hard way that textbooks are incredibly overpriced and that there’s really no reason to buy them.
Instead of buying your textbooks, rent them. You’ll pay a fraction of the price, and it’s extremely unlikely you’ll ever need that textbook once the class you’re using it for is over. If there’s a book you think you’ll want to use again, do yourself a favor and buy a used copy. In some cases, it won’t be much more expensive than renting.
Doing this will save you at least several hundred dollars each semester, if not more than a thousand.
Cook for yourself.
Dining out is expensive, and even the meal plans offered by your school aren’t cheap. The most affordable way to eat is always to cook for yourself. It’s not hard, and it’s also much healthier for you than eating out all the time.
Even if you live in the dorms, you can cook most of your own meals. Many college dorms have communal kitchen areas, and they’re not exactly in heavy use. There’s a good chance you’ve got access to a full kitchen, and that can save you even more money than renting your textbooks does.
Even if you don’t have a communal kitchen in your dorms, you can still cook most of your own food. While a hot plate may be forbidden, you’d be amazed at the variety of meals that can be prepared with nothing more than a rice cooker and a microwave.
Creating a budget is one of the best ways for college students to save on their expenses, minimize their debts and relieve a lot of the money-related stress that’s become a common feature of college life. It’s easy, free, and it’s a skill you’ll use for the rest of your life.