College students are always excited about moving into a dorm, starting classes and learning how to work with their finances. However, the best way to enjoy your time at school is to plan your finances from the start. Guessing or hoping that you have enough money to cover your expenses for the semester can be a recipe for disaster. The best approach to successful finances is to make a budget plan, learn how to cut back on expenses and spend your money wisely.
How to Make a Budget
- Decide whether you prefer a yearly, quarterly or monthly budget. Most college students find it easier to deal with income and expenses using a monthly budget.
- Make a list of your expected income. For example, you may have income from a part-time job, money from your parents, savings, a grant or a scholarship.
- Listing your expenses by categories will help you to see where you are spending your money. Categories should include expenses such as your dorm rent, groceries, tuition costs, supplies, books and any fees. You will also need to include costs for insurance, car expenses and city transportation. Lastly, do not forget entertainment, clothing costs and cell phone expenses.
- Build savings into your budget. By setting aside a small amount, you will be forced to save for unforeseen expenses and emergencies such as car repairs, increases in dorm rent or an increase in the cost of living.
- Maintain a folder by category where you can file all your receipts and bills. This may come in handy for reporting taxes or disputing a bill.
- Compare the total income against your total projected expenses. Make sure they at least balance. If you come up short, you will need to find additional sources of income or reduce your expenses.
Cutting Back on Expenses
- Once you begin tracking your expenses, you may notice you spend a considerable amount on entertainment like movies and dining out. You could save a lot of money by cooking yourself and cutting back on restaurant meals.
- Buying used textbooks will be much cheaper than purchasing new ones. You can also save by choosing e-textbooks as another option.
- Whether you are renting a small apartment or a dorm room, you will save money if you share the cost with a roommate.
- In the long run, food purchased at convenience stores and from vending machines costs far more than meals you prepare yourself.
- Make good use of thrift stores to find inexpensive clothing and used furniture to furnish your dorm room.
- Plan out your purchases carefully, and avoid impulse buying.
Tips for Budgeting
- Determine how much cash you need on a weekly basis. This money should be used for small purchases. By paying with cash, you will be more aware of how much money you are spending.
- Make sure you understand the difference between a need and a want. For instance a need would be shelter like your dorm room and groceries. A want might be new music or a pair of jeans.
- When building your budget plan, it is better to underestimate your total income. If you come up with more money than you anticipated, you can always put it into savings.
- Assume your expenses will be higher than you forecast. Most students learning to budget leave out expenses or underestimate their costs.
- College identification cards often open the doors to student discounts from various retailers. You may qualify for discounts from places like Amazon, Best Buy, Banana Republic or other stores.
- Student activity centers often produce a monthly schedule of free events held on campus. It is a great way to socialize and take advantage of free events like sports, movies and free pizza.
There is no doubt, you may make a few mistakes with your finances, but you will learn about spending and saving and how to get the most value from your money by maintaining a budget plan.
James Hendrickson is an internet entrepreneur, blogging junky, hunter and personal finance geek. When he’s not lurking in coffee shops in Portland, Oregon, you’ll find him in the Pacific Northwest’s great outdoors. James has a masters degree in Sociology from the University of Maryland at College Park and a Bachelors degree on Sociology from Earlham College. He loves individual stocks, bonds and precious metals.