All those textbooks, Stage rage nights and splurges on SkipTheDishes can quickly and easily burn a hole through your bank account if you don't have a detailed budget set up. To help you all get off on the right financial foot, we’ve broken the college budget-planning process down into five easy steps.
1. Keep Track of It
In order to maintain your budget, you have to find some way to organize it and keep an eye on it. If you’re a low-tech kind of gal, a spreadsheet is an easy solution – make one column for your expenses with a brief description of what they are and one for the money you’re dedicating to them. You can use Excel’s calculating features to easily draw up totals and make sure that you have all of the funds you need to cover your expenditures.
If you’re on a smart phone and want something more streamlined, there are dozens of apps at your disposal. One app is from Mint.com, which not only allows you to plan your budget but securely links up to your to bank and automatically records any transactions you make. You can access and update it from both your computer and your smart phone, so you won’t have to key in your entire plan on a tiny keyboard but can still make any quick fixes you need to while you’re out and about.
2. Outline Your Expenses
While it’s impossible to predict every cost you’ll incur, there are some you’ll need to take into consideration. Figure out all of the things you know you’ll definitely have to pay for and record their costs as accurately as possible. For expenses that fluctuate from month to month (i.e.-utilities) and expenses that you have some flexibility with (i.e.-food) make an estimate based off of the average amount you pay and give yourself a healthy margin in case you end up with a bigger bill than usual.
“It's really important to know the difference between wants and needs when budgeting.”
Leaving yourself some leeway in case of those unpleasant surprises will help you avoid coming up short. For now, hold off on factoring in any financial aid you expect to receive at this point – even if you’ve been awarded a full scholarship, write down what your school-related expenses would cost you with no help at all. This will give you a sense of how much money you absolutely need in order to keep yourself out of the danger zone.
3. Determine Your Income
If you're working a part-time job, calculate how much you expect to make a month (but don’t forget about your taxes!). It might vary depending on tips or what hours you’re able to snag, so give it your best estimate and this time shoot for the baseline. Plan for the minimum amount of money you could make in case it’s all you manage on any given month – you don’t want to come up short in a delicately balanced budget.
Also take a look at loans, scholarships or any other aid you might be getting from your family or other sources. Finally, be sure to include any fortuitous freebies like birthday or other money gifted to you or sporadic paydays you can snag by volunteering to participate in any research studies.
All that said, if you find yourself without a whole lot of cash coming in, find a way to make some! Trying to work between classes can be tricky with homework and extracurriculars, so trying to accumulate money in the off-months can be helpful. But, if you find yourself in need of money while at college, on-campus jobs are a great source of income.
4. Balance Your Budget
Once you’ve determined your expenditures and how much money you have to work with, figure out exactly where your money is going. Line up your financial aid and any money your parents have agreed to contribute. Then, total up the amount of money you’ll need to pay out of pocket to cover the rest of your inflexible expenses.
While many students would like to think that they can limit their spending to necessities alone, the odds that you’ll be able to resist the lure of a night out or a little shopping spree every once in a while are slim – and understandably so. This is college after all and there is nothing wrong with a little bit of fun to balance out the stress of trying to hit a home run in all of your classes and participate in all of the extracurriculars necessary to build a killer resume.
Consider the spare-change spending on things like coffee and snacks that is so easy to overlook on a daily basis like, but can deal a serious blow to your bank account.
“A $3 drink from Starbucks might not seem like a lot but twice a week over 9 months and suddenly you’ve spent over $200 on a coffee!”
You never know when your laptop or phone may break or if you happen to lose it on a wild night out. In these cases, you'll be thankful for having the funds to get them repaired ASAP instead of trying to survive without texting (trust me, it’s harder than it sounds). If you don’t end up using the money you set aside for it, roll it over to the next month or drop it into your savings. You should also put a portion of your paycheque into your savings account if you can spare it in case an unplanned adventure pops up, like studying abroad or an internship away from home.
5. Stick To It and Adjust Accordingly
What use is a budget if you ignore it? Do a month-long trial and really try to stick to your plan. Note any places where you may have devoted too much or two little of your money. At the end of the month, tweak your plan to better fit your spending habits.
The Bottom Line
It's most likely a challenge to look beyond your next house party or university exam, but if you continue to mount your debt now, it will only be harder to climb out of outstanding loans later on. For instance, making late payments on your credit card bills will hurt your credit score more than you think. Want to check your credit score for free? Sign up for an account with Borrowell in less than 1 minute.
Click here to download a monthly university budget template.
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