Budgeting and living within one’s means can be a difficult task for anyone. However, it can be particularly challenging for college students, who typically have limited funds and unfamiliar expenses such as rent and tuition. Despite such challenges, it’s best to begin managing your money while you’re still in college and to form good spending and student savings that will serve you well for the rest of your life.
In theory, how to manage money in college is simple: Don’t spend more than you earn. Note your total income by semester, month or week. Then add up all your expenses for the same time period. Make sure your expenses are less than your income; if they’re not, find a way to cut expenses or boost your income.
In practice, making a budget is not so cut-and-dry. Take a close look at your income. This may include student loans, income from a part-time job and cash from your parents.
Then scrutinize your expenses. Some expenses will be per semester and will be relatively constant: tuition, fees, room and board, and textbooks. Others will be the same each month: television, phone bill and rent if you live off-campus. Then you have expenses that may vary each month or week, including groceries, transportation and discretionary spending like eating out and buying new clothes. To uncover your spending habits, it’s a good idea to keep all your receipts for about four weeks and then take a look at exactly where your money went.
If you’re spending more than you take in, such as by charging purchases to your credit card and racking up debt, break the habit as soon as possible. There are a few ways you can revamp your budget to make ends meet. The first thing you should do is limit your discretionary spending. Put a cap on how much you allow yourself to spend on indulgences like dining out, going to the movies and buying new clothes.
If you find it hard to keep track of your spending or stay within a limit, start using cash instead of a credit card. That way, if you don’t have the cash to pay for something, you know it doesn’t fit your budget. Although it may be difficult at first, you’ll acclimate over time to living on a budget.
You can also find a way to supplement your income, rather than or in addition to reeling in your spending. Consider taking on a part-time job on campus such as tutoring or becoming a teaching assistant. If you already have a job but it doesn’t pay well, consider finding a similar job that pays better or consider asking for a raise at your current job.
Once you get your budget on track, you might even be able to take it a step further. If you have cash to spare, set it aside and start creating an emergency fund or savings fund. This can help you if you have unexpected medical bills or lose your job. It can also help you settle your credit card debt or repay your student loans upon graduation.
Katherine Pilnick writes and blogs about personal financial well-being and issues that influence it for Debt.org, America’s Debt Help Organization.