I'm a College Student. Here's How I Stay on Budget
College students are notorious for running out of money by the end of the semester, but this doesn’t have to be the case! If you take the time to plan out your expenses in advance and stick to them, you can ensure that you stay on budget during your school year. If you follow these tips, you’ll never spend more than you planned in college again!
College Students, Take Note
Many college students think they know how to manage their money well in school, but in reality, they might not be budgeting correctly for what they’re actually spending each month. The lifestyle of a typical student usually includes food, housing and entertainment expenses with little left over for anything else. To make matters worse, studies show that nearly half of Americans spend more than their monthly income when it comes to living expenses—and 10% spend more than triple! If you don’t have any savings or assets when you graduate from college or university, then it could be extremely difficult to start building wealth later in life due to poor budgeting habits during your formative years. Thankfully, there are ways you can change your spending behavior today so that tomorrow is a lot brighter financially speaking.
Identify Your Fixed Costs
Are you paying rent or for college? Are you renting or buying a car? Are you budgeting child care for your family members who depend on you to help them out financially? If so, budget accordingly by keeping these fixed costs in mind when evaluating potential opportunities to save money, like cutting cable or eating meals at home instead of dining out. While some things are more flexible than others, make sure to include everything that is needed regardless of circumstance in your budgeting plan! Knowing exactly how much is due each month can be an incredibly powerful tool for limiting overspending.
Maybe you’re watching TV too much or spending too much at coffee shops. Maybe you need to get your textbooks from an online store instead of campus bookstore. Whatever it is, identify where your money is leaking out and stop doing it! It’s easier than you think to cut back here and there without dramatically changing your lifestyle, so start small and adjust accordingly if needed. While cutting things out isn’t necessarily fun, staying in budget can make all of life’s other major decisions much easier to swallow.
The first step in budgeting is to really figure out how much money you have to spend each month and what bills are non-negotiable. It sounds simple, but if you don’t have a financial plan in place before you start spending, it can be hard to stick to one later down the line. Make sure that your plan matches up with your income, bills and expenses before starting any kind of shopping spree or making drastic changes to your routine. Get into good habits now so that they’ll stick when things get tougher—like when that next round of tuition payments comes due! Be smart about which luxuries can be sacrificed—which ones are nice, but ultimately not necessary?
Step Away From the Entertainment Spending
Students will often fall prey to entertainment spending, but remember: You have other options! It may not be as simple or convenient, but keeping your social life going doesn’t have to cost an arm and a leg. In fact, maybe you can ditch cable TV for something cheaper and more interesting – like actual people! Go out to coffee with friends instead of giving in to that Friday night movie theater date—you can learn just as much from each other over coffee as you could from any movie screen. If you’re really struggling with entertainment spending, hit up some free events in your area; just check online for what’s coming up in your town before you go busting out that credit card. You might actually discover some freebies along the way, too!
Set Aside 10% Into Savings
If you’re going to splurge occasionally, make sure you’ve got money in your savings account to cover it, and remember that a little bit saved now can add up over time. Even if you don’t have thousands of dollars sitting around right now, even small amounts can add up quickly when invested wisely in interest-bearing accounts. Allocate 10% of your earnings into savings if possible—some months may be better than others when it comes to bonuses or returns from side hustles. Even if you need to cut back in other areas, consider starting off by automatically transferring 10% of your take-home pay into a savings account each month so that these monies are set aside for future use and won’t be spent frivolously in the moment.
Set Aside 10% Into Investments
Most college students probably don’t spend much time thinking about investing. The best way to save money in college is to be intentional with your spending and to put aside some of it for future use by investing it in assets that will hopefully appreciate over time and, therefore, provide returns in addition to regular savings account interest. If you can set aside 10% of your disposable income every month and invest it in stocks or bonds, you could see positive growth during school and after graduation when you begin withdrawing from those investments later on down the road. That’s one of many reasons why IRAs are such powerful investment tools for young people just starting out their careers.
OK, so there are times where it’s OK to blow your budget—like when you have an emergency or an unexpected expense. But these are exceptions, not rules. To get serious about sticking to your budget, forget about turning up at every party, bar or happy hour possible. Maybe skipping out on one event here and there won’t hurt too much (and will keep you in that job), but it’s when people start consistently blowing their budgets that they fall into financial trouble in college and for years after graduation.
Teens and college students spend $115 billion annually in retail stores and online, yet most of them cannot name their favorite brands or identify popular designers. As with anything, if you’re buying electronics just because they’re advertised at a good price, you’ll end up spending more money in the long run—and turning your friends into walking advertisements for stuff they don’t need or even want to buy themselves. Look for quality over quantity and always research companies before choosing them to make sure they stand behind their products and services with stellar customer service, especially after purchase. If an advertised price is too good to be true, it usually is; wait until that sale goes live before you buy anything at all.
Stop Chasing A Fancier Lifestyle
The truth is that most of us only get one shot at true adulthood—the time in life when we don’t have to live with our parents, make excuses for our crappy clothes, or apologize for living like a broke college student (even though we all did it). That doesn’t mean you can’t be an adult and still enjoy your favorite weekend activities or keep up with your favorite TV shows; it just means you need to focus on long-term goals more than short-term wants. The money you spend today might be keeping you from attaining tomorrow’s goals—which should always come first if possible.
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