Money, Money, Money: How to Budget Money – Gretchen Lasso
One challenge that college students often face is budgeting finances. The temptation to spend money is high when students are on their own, typically without extreme parental or guardian oversight.
The App Store and Google Play are flooded with thousands of finance apps that are supposed to help budget income and expenses; however, these are only a few ways to budget spending in college.
The first tip experts give is to be realistic about your budget. It is important to start by looking forward to how much money you have coming in each month. Once this is figured out, look at what you need to spend on needs such as rent, loans, gas, electric, phone, car, groceries, etc. The needs come before the wants.
When you estimate your monthly income, aim low. When you have a lower number to start with, there is less flexibility in the budget, which is a good thing.
Differentiating between needs and wants is necessary for staying within your budget. You can think about how much you want to spend on going out to eat, entertainment and things of that sort.
Budgeting will become something you do naturally once you get the hang of it, and it is not a scary concept.
In Jeff Yeager’s book The Cheapskate Next Door he writes: “Contrary to what non-cheapskates seem to think, only about 10% of the cheapskates polled said that they have a formal, written household budget. For most of us, a budget seems too much like a diet: a plan that’s always looming over you, bring you down, when what you really need is a lasting lifestyle change that makes the desired behavior effortless.”
Savings should be an expense in your budget. It is a good place to keep money for semesterly expenses like textbooks and course fees. A savings account also helps for setting money aside for student loans or to get ahead on rent or your car.
You should also have an emergency fund. The emergency fund should be a cash reserve only for emergencies. As a student you should have an emergency fund; however, it doesn’t need to have as much money in it as a family’s would.
As you are building your budget, you should have the money talk with your parents, guardians, significant other, or anyone else who will helping to finance you throughout college. Having this conversation will help everyone understand expectations and keep everyone on the same page.
Throughout college, you will obviously need textbooks; however, you do not need to buy each and every textbook. Renting used textbooks or buying them from someone you know will save you a lot of money throughout your college years.
Once you have your budget made, it is time to manage the budget. Writing down or logging your actual expenses helps you see where your money is going. This includes all expenses such as extra cell phone usage and music/app downloads.
As your expenses and income change, it is important to revisit and adjust your budget. You can be intentional with how you use and save your money because you have control of it.
Overall, the trick to budgeting is to not spend more than you make.