Budgeting is a tricky task for most people regardless of age and lifestyle. For a college student, however, balancing tuition, room and board, phone bills, and car-related expenses can be incredibly overwhelming. With hard work, determination, careful planning, creativity, and smart budgeting, college students can balance having a social life with saving and staying on top of important bills. Here are some basic budgeting tips and tricks to help college students balance their first years on campus with the obligations of the real world.
Expenditures to Consider
While every college student’s income and expenses will vary exponentially, there are certain expenses that most students will have to pay on a monthly or recurring basis. The hardest part of budgeting is sitting down and calculating each expense as it compares to the total available income. Once the budget is set, the second hardest thing is sticking to it and not getting in the habit of overspending or taking out personal loans or lines of credit to fill in the gaps. If you absolutely need to take out a loan, do your research and find a good one that will allow you to pay it back in a reasonable amount of time. That way, you can include it in your budget and pay it back within the agreed on timeframe.
Most college students will have to pay some form of rent whether it is an apartment with roommates, room and board at a university, or staying with family or friends. Additionally, most college students will also have some form of car payment and an insurance premium to consider; some students will have their first adult experiences with figuring out auto loan options such as title loans. After any applicable student aid, grants, and scholarships have been applied, some students are left with a tuition balance. Some students must also pay for textbooks and lab fees. School supplies like backpacks, pencils, pens, notebooks, digital recorders, calculators and other related expenses will also need to be factored into the budget.
Calculating the Budget
In order to accurately calculate the budget, students will need to sit down with their bills and a notebook or online spreadsheet. To begin, list each fixed bill in one column. Fixed bills are recurring monthly payments that have a set amount or fee. Examples of fixed payments are things like rent, car insurance premiums, car payments, cell phones, health insurance premiums, payments on any loans already taken out, and internet costs. These are expenses that must be paid at a set cost each month. There is no wiggle room with fixed expenses, and these types of payments are essential expenses that most students need to pay in order to live. While car insurance, health insurance, cell phones, and internet costs may vary from time to time, these costs remain generally the same each month and can be considered a fixed cost.
Once the fixed expenses are listed, you can begin to list the variable expenses. Groceries, gas, electricity, savings, and water are examples of variable costs. These monthly bills and necessities are essential for thriving, but these are the areas of the budget that offer a bit of wiggle room when it comes to balancing the budget. It is important, when creating a budget, to allocate a specific amount of money to each respective variable category. As you progress through the month, you can adjust these amounts accordingly. For example, if your electricity bill is $50 higher this month than last month, you can always deduct a small amount from your allotted grocery budget each week to offset the higher charge.
Once you have added all of your fixed and variable costs to your unique spreadsheet or budget book, you can create a column for your miscellaneous expenses. Clothing, dining out, entertainment, streaming services and fun money all fall into this category. After all of your bills and necessary expenses are accounted for, you can create mini categories for all of your special treats each month. After accounting for all of your necessary bills, you may find that you have a very small budget for extraneous spending. On the flip side of the coin, you may find that you fare very well and can afford to allot more money to your savings account or for dining out.
Creating a realistic and honest budget keeps you aware of your spending habits and holds you accountable for your purchases. Sticking to a budget may be hard, but it sets you up for financial success as an adult and ensures that you always have ample money to pay for all of your fixed expenses, variable costs, and miscellaneous purchases. If you get a raise or you switch jobs, you may need to create a new budget to reflect the increase or decrease in income and change how you will need to spend your money.