College Budget
The vast majority of college students, and even young adults, do not have a budget. I didn't have a budget for a very, very long time, and I'm entirely certain I'd have more money in the bank if I did. Why don't we do something that we know we should and makes complete sense? The answer is that budgets seem difficult, boring, and restrictive, when college is about spontaneity, fun, and passion. In this article, I'll help you make a budget and teach you some behavioral tricks to help you stick to it.
As a quick note, these examples will be from my actual college budget. Bear in mind rent and groceries, but also minimum wage, will change depending where you live. These will be negative numbers. You can then, if you choose, include your cost of school by dividing what your August or January bill was by 5 months a semester or by 6 a year. You may decide not to include school costs if you have it covered by scholarships or other aid. Next, to the right of that, you'll put in your income. As a Resident Advisor for a couple of years, I didn't have a monthly income, but instead I broke up both my stipend and my housing rate by month to show the money in and money out for each semester. You can break up your scholarships by month as well, and of course include your monthly paycheck. It might look like this:
Now, simply subtract your monthly expenses from your monthly income. If you have a positive amount, congratulations! Put that money into first an emergency fund, then paying off debt, then savings and investments. If it is negative, go back to your categories and evaluate where you can and want to save money. If you're like me, your "eating out" category might be high; it may be entertainment, or even random non-necessities you bought while shopping like clothes or face masks. Pick your goals for each category. Boom, you have a budget! Now, the part that involves a little more than typing up numbers: sticking to your budget.
Disclaimer for legal purposes: This is based on my personal experience as a college student and I'm not a professional in personal finance.
MAKING A BUDGET
You can make a simple budget using Excel or Google Sheets. Open one up and start two columns on the left: a category of purchase and next to that, the total. Download your statement from the last month from your bank, and go through every purchase, categorizing it and updating your total. It might look something like this:
As a quick note, these examples will be from my actual college budget. Bear in mind rent and groceries, but also minimum wage, will change depending where you live. These will be negative numbers. You can then, if you choose, include your cost of school by dividing what your August or January bill was by 5 months a semester or by 6 a year. You may decide not to include school costs if you have it covered by scholarships or other aid. Next, to the right of that, you'll put in your income. As a Resident Advisor for a couple of years, I didn't have a monthly income, but instead I broke up both my stipend and my housing rate by month to show the money in and money out for each semester. You can break up your scholarships by month as well, and of course include your monthly paycheck. It might look like this:
Now, simply subtract your monthly expenses from your monthly income. If you have a positive amount, congratulations! Put that money into first an emergency fund, then paying off debt, then savings and investments. If it is negative, go back to your categories and evaluate where you can and want to save money. If you're like me, your "eating out" category might be high; it may be entertainment, or even random non-necessities you bought while shopping like clothes or face masks. Pick your goals for each category. Boom, you have a budget! Now, the part that involves a little more than typing up numbers: sticking to your budget.
TRICKS TO STICK TO IT
Trick 1 - Want to stick to it:
You probably have a reason you want to budget and save money in the first place, but that reason might be as simple as, "I'm broke," or "I'm scared I'm going to be broke later." That reason should theoretically be very motivating, but we still manage to break our budgets. The way to turn this around is to re-frame your budget. Instead of looking at it as restricting yourself from things you want, think of it in terms of how it will actually help you do things you want. If you want to travel, have kids, live in a city, go to graduate school, get a house or a car, or even just buy one nice luxury purchase, having a budget is freeing you to do that. Think about things you really want, that make having 20 wings delivered or buying a cute shirt seem much less appealing in comparison. Also, make sure to restrict multiple things a little. Instead of trying not to eat out at all, maybe do pickup instead of delivery, and do it less times a week, while also going shopping a little less often. If you try to have an unrealistic and austere budget with no room for fun, you will break it.
Trick 2 - Make it harder to impulse buy:
If you know going to the grocery store makes you grab unnecessary items, try doing your shopping online. Many grocery stores have the option to let you pick-up, and you only pay a small service fee and no delivery fee for the store to put your items together for you and put it in your trunk. I don't recommend this for produce, as they sometimes put moldy or old fruits and veggies in. This method of grocery shopping exposes you to less colorful packaging, smells, and temptations to walk by; you only see what you search for. If that's not for you, make a grocery list, follow the meal planning tips I wrote about in the post "Making and Saving Money in College," and be sure to never go on an empty stomach.
Trick 3 - Put barriers and limits between yourself and your bad habits:
This tip is from a TED talk I watched featuring behavioral scientist Wendy De La Rosa. If you have a particular bad money habit, like eating out or taking Ubers excessively, you can do two things to make it harder in the moment to make the bad choice. First, you can unlink your app from your debit or credit card and connect it to a specific savings account where you keep only that week's or month's budget for eating out/ride-sharing. That means doing it past your budget requires you to acknowledge you've gone over it and re-connect to a different card, making it more likely you'll skip it. My interpretation is that you can also delete the app from your phone, so if you need it you'll have to re-download it as well, adding another layer. Second, De La Rosa recommends setting a per-week limit based on your budget. It's hard to count money over time in our heads, so we might not realize we've spent more than $50 in a week on takeout. However, if your average takeout cost is around $20-30, you can set yourself a limit of two times per week, which is much easier to keep track of and remember.
Trick 4 - Automate it:
Set up your direct deposit to put a certain percent of your income into checking and another percent into savings. You can prepay your rent bill as soon as you get your check, that way you see how much money you really have after bills in your bank account. Alternatively, you can immediately put how much you know you'll need for rent and bills into a specific account from which your bills will withdraw automatically on the 1st, 15th, or 29th - whenever they're due - or from which you can pay them manually. If you want to invest, you can set up an app like Acorn that does it automatically by rounding up transactions, or set recurring investments of as little as $5 to an index fund - as much as you would pay for a Spotify student account. Wherever you want your money to go, make it automatic.
Budgeting is hard for full-blown adults, let alone young adults with less experience with financial independence paired with a thousands+ dollar bill for school every semester. It's extremely impressive you're here reading about budgeting in the first place, and I encourage you to start saving right now by doing the first half and making your budget. Get the ball rolling so you can improve your personal finances and have more money for experiences and for achieving your goals!
What are your tricks to save money and stick to a budget? Share them in the comments!
Related Articles: Funding Your Education, Making and Saving Money in College
Check out my other content >> The College Search, Getting Ready to Register, New Year's Resolutions?, How to Organize Your Time, How to Write a College Application Essay in 2021, How to Actually Use LinkedIn as a College Student
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