It seems out of the many things we are supposed to learn… finances usually are not one of them. However, they are extremely important. I grew up with amazing financial influences.. but I realize that is not the case for everyone. Without the financial advice I received as a young girl, I would not be where I am today without it. I learned about the hard things… debt, bankruptcy, etc. The influences in my life learned from their own experiences and wanted to make sure I never experienced the rough financial hardships they faced. You do not need to be a business or finance student for this to apply to you. It can apply to everyone regardless of their financial situation. Now I am by no means an expert… and I still have a lot to learn when it comes to mastering my finances. But, I know how hard it is to navigate your finances as a college student. It seems like the tiny bit of money us students do make is spent the second we receive it, and we have racked up several student loans just to afford our education. Learning how to budget early on can set you up for long-term success and financial growth. Not only will you save money, but you’ll learn how to manage it, pay off your debt, maximize your return on investment, and live financially free.
Keep reading for a guide on how to effectively budget as a college student!
Income and Expenses
Start by assessing your source of income. Even if it is your part-time job at your universities cafe, that’s still something! After identifying your income sources, list all of your expenses. Categorize your expenses into both fixed and variable costs. Some examples of fixed costs would be expenses such as tuition, rent/room and board, insurance, etc. Variable costs would be expenses such as groceries, entertainment, dining out, or any extra excursions. Understanding this will help you get a better idea of how much money you have coming in, and where it is all going.
Budgeting Plan
After assessing your income sources, create a detailed budgeting plan. This does not have to be a financial advisor-esque budget. You can use a spreadsheet if you’d like, or just use the notes app on your phone! Whatever works best for you and helps you get a visual understanding of the money you are working with. Allocate specific amounts to each expense category based on your income. ( $50 for gas, $25 for eating out, etc.) Aim to follow the 50/30/20 rule. This rule says 50% of your income goes to needs, 30% goes to wants, and 20% goes to paying off your debt or saving.
Tracking Spending
After developing a well-balanced budget.. it is essential to begin tracking your spending to ensure you are following said budget. Consistent tracking of your spending is crucial.Regularly reviewing your spending can help you identify areas where you might be over-spending and make adjustments accordingly. This could be looking at your bank statements, using a spreadsheet, finding apps/tools that do the tracking for you, or using our free printable/downloadble budgeting planner at the end of this post 😉
Saving
Now that you have a a curated budget, and have identified your spending patterns, it is time to start saving! I would recommend to begin saving for an emergency fund first. This includes any big or unexpected expenses you have that come your way. Dave Ramsey reccomends having 3-5 months of income in an emergency fund. Now this may only be $500 for your part time job income… but that’s something! After establishing an emergency fund, I would then split up big things you desire to save for, and put that money into an account. For example, develop a college fund, house/apartment fund, vacation fund, wedding fund, and more. Only spend the money in those accounts if it’s for the applicable subject area.
Now that you have identified what you will be saving for, I recommend finding any other ways you can save money. Tack advantage of discounts, student deals, coupons, and any other cost-saving opportunities. Buy used textbooks instead of brand new ones, limit the amount of coffees you buy each morning and start making it in your dorm instead, cook your meals rather than buy food at the dining hall. Small changes can add up to significant savings over time.
Credit
One thing I have learned is that credit cards are not bad… if you use them WISELY. Credit scores are essential when it comes to making big purchases. As a student you may not have to worry about your credit score now but I would think about building your credit in the near future, to benefit you when you get out of college and want to buy that new car! Just start small. Get a student credit card that only has a $500 limit. Do your research…there are a ton of great student cards out there. If and when you have a credit card, limit your spending and make sure you never miss a payment (most credit cards have ridiculously high interest rates.) If you pay your credit card bill every month then your credit score will increase, you will have a good financial record, and you could possibly receive a higher credit limit which will all benefit you in the future. When purchasing things with your credit card, think of it as your money. Just because the credit card company gave you $1,500 to spend, does not necessarily mean you have the money to do so. Remember… everything you borrow you will have to pay back (just like those impending student loans…)
Set Financial Goals
While it’s important to manage your current finances, think about the future. Set financial goals, such as saving for a study abroad program, paying off your student loans, or opening a retirement account (like a Roth IRA) and begin putting money away for retirement. Having clear goals can keep you motivated and driven to spend/manage your money wisely. Remember, your financial goals and situation will change over time. Regularly review and adjust your budget as needed. This flexibility will help you stay on track and adapt to any changes that occur.
Conclusion
Mastering your finances takes time and discipline. Stick to your budget, be patient with your progress, and celebrate your financial milestones along the way. Developing good financial habits now will benefit your throughout your life. Even reading this post is progress! Look at you go! 🙂
I know how daunting budgeting and money in general can be as a college student. However, with a structured approach you can take control and start mastering your finances. By understanding your income and expenses, tracking your spending, and planning for the future, you will set yourself up for financial stability and success. Start mastering your finances today, get ahead, and enjoy your financial freedom! I’m so proud of you. You got this.
Resources and Recommendations:
1.Dave Ramsey: any of his books, podcasts, or courses!
Link: https://store.ramseysolutions.com/dave-ramsey/
2. Ramit Sethi: I Will Teach You To Be Rich (book, podcast, and more.)
Link: https://www.iwillteachyoutoberich.com/
3. The Financial Feminist book and podcast (Her first 100k) by Tori Dunlap
Link: https://herfirst100k.com/financial-feminist-podcast/
4. Girls that Invest book and podcast by Simran Kaur
Link: https://girlsthatinvest.com/
5. Tony Robbin’s: Books, podcast, and more!
Link: https://tonyrobbins.com/
6. The Psychology of Money book by Morgan Housel
7. Doing Business God’s Way book by Shae Bynes
8. Secrets of Six Figure Women book by Barbara Stanny
9. Invest like a girl book by Jessica Spangler
10. Girls Just Wanna Have Funds book by Emma Due Bitz, Camilla Falkenberg, and Anna-Sophie Hartvigsen
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