(Below, is a guest post provided by Good Nelly. More about her at the end of the post.)
Indeed, a budget is not something that you’ll be excited about! However, it’s an acquired practice. If you realize the advantage of it, you will devote time to plan one.
Why you need a realistic budget for a college student
When you plan a budget for the first time, you will have to be honest with yourself. Sometimes you don’t realize where you’re spending. A budget helps you to realize and curb them, if necessary. It will also help you to make small changes to your lifestyle to redirect your cash flow as you want to.
Here are a few steps and strategies to plan a typical college student budget
Step 1: Analyze Your Previous 1-2 Months Spending
To plan a realistic budget for a college student, first of all, analyze your expenses of past couple of months. Gather your credit card statements, bank statements, receipts, etc. of the past few months. You will get an idea about the categories you need to create and how much to allot in each of them.
Step 2: Anticipate Your Expenses
You have to take into account your college expenses while planning your expenditure. So, make a note of the costs for textbooks, accommodation, transportation, clothing, and also keep some room for miscellaneous expenses.
Also, take into account your college grants. It will take care of a major part of your college expenditure.
Step 3: Figure Out How Much You Can Earn On Average
To plan a realistic and suitable budget, obviously your income needs to be more than your expenditure. Apart from your student loan, you can do a part-time job or get some monetary help from your parents. So, consider all sources of income to decide on an average income every month.
It will also help you to determine whether or not you need to earn extra to meet your necessities.
If you’re getting a big amount as a loan, make sure you divide it amongst the number of semesters so that you know exactly how much you have in each semester.
Step 4: Define Your Financial Goals
Paying off your student loan debt should be your primary financial goal at this stage. Along with it, I would say, build an emergency fund. Not only it will help you to meet sudden expenses during your college life, but the habit will help you build a good financial future.
Think about other financial goals that you want to achieve like a dream house, a perfect vacation, and so on.
You should start saving for retirement the moment you start doing your first job. Remember this when you start doing your first job after your college.
Step 5: Create Your Budget
Now, it’s the time to plan a realistic budget based on the income and expenses. First of all, take into account your necessities. After that, allot money for your wants and enjoyment. However, make sure you’re able to save an amount from your income every month.
If you feel, you can also use a college budget calculator, where you can plan your budget and analyze it at the end of every month.
Step 6: Save As Much Money As You Can
Follow these steps to save money as a college student and make your budget successful.
- Always pay the entire outstanding amount on your credit cards every month
- Restrict your eating out to once or twice a month and avoid dining at fancy restaurants
- Make a list while going grocery shopping and never go when you’re hungry
- Avail public transportation if possible or have a bike instead of buying a car
- Ditch the gym membership and work out with friends amidst nature
- Ask for used textbooks from your seniors and sell your last semester’s books if no longer required
- Share your apartment with others to save money and have fun too
- Do not plan expensive vacation, instead venture out nearby places
- Avoid buying branded items, but purchase good quality products
- Use your vacation time to earn extra by doing part-time jobs
If you’re looking for a guideline or a college student budget example, then here’s a glimpse of it for you. However, it’ll depend on the city you’re living because the cost of living in some cities is a bit higher.
Try to restrict your grocery shopping between $100 – $200, and try to restrict your entertainment within $100.
Don’t worry! You won’t be able to formulate a realistic budget in the first go. Trial and error will help you create a suitable budget which you’ll be able to follow. Doing so, you’ll be able to avoid debt and manage your money efficiently.
However, if you fall into debt and it becomes difficult for you to manage your utility bills, you can consolidate utility bills and pay them off with ease. You can choose from enrolling in a consolidation program or opting for a balance transfer method to consolidate and repay your bills. You can also include your credit card bills along with your utility bills to repay them.
But, it is always better to manage your finances in a way such that you don’t fall into debt.
So, plan a realistic budget as a college student and take the first step towards a good financial future.
Author’s Bio: Good Nelly is a financial writer who lives in Milwaukee, Wisconsin. She has started her financial journey long back. Good Nelly has been associated with Debt Consolidation Care for a long time. Through her writings, she has helped people overcome their debt problems and has solved personal finance related queries. She has also written for some other websites and blogs. You can follow her Twitter profile.