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Budget:
There aren’t too many steps to creating a budget—the biggest challenge is maintaining it. StudentAid.gov offers these six tips on how to budget money as a student.
1. Determine a Time Span: You can create a budget for whatever time frame you’d like, although 1 month is a popular option. As a student, you could create a separate budget for each term, carefully considering how your expenses might change over the course of the semester (for example, you’ll probably pay more for education-related expenses such as textbooks and supplies at the beginning of the semester).
2. Break Down Your Income: For your budget to be effective, you need to know where your income is coming from. In addition to any income you get from your job, include financial aid that can be applied toward tuition, fees, and other expenses. Determine how much income you will be receiving over the time span of your budget.
3. List Your Expenses and Track Your Spending: Next, you’ll want to list out all of your expenses over the course of your budget’s time span. You can estimate expenses by looking at past bank statements and credit card statements. Anticipate the costs of tuition, textbooks, school supplies, transportation, and other costs. Over the next month, record all of your purchases and add these to your budget, adjusting your original estimates as necessary. It can be helpful to organize your expenses into different categories, such as education, food, housing, and entertainment. Separating expenses into needs and wants can help you figure out where you can cut back.
4. Do the Math: After you’ve tracked your spending for long enough to get an accurate picture of your finances, it’s time to see how your income compares to your expenses. Subtract your total expenses from your income, making sure you are using the same time frame for each. You want to ensure your expenses aren’t higher than your income. If you end up with a negative number after subtracting your expenses from income, it means you are losing money. Take a look at your variable expenses and consider ways to reduce nonessential spending.
5. Save Your Money: Continue monitoring your spending each month. As you make day-to-day purchases, be mindful of your budget and consider whether or not you really need what you are buying. Reducing spending on items such as coffee, eating out, and entertainment can go a long way. If you have a comfortable amount of money left over at the end of the month or the term, don’t let it tempt you. Save it for future expenses, such as next semester’s tuition.
6. Revisit Your Budget: An essential part of budgeting is revisiting your budget frequently and updating it as needed. Over time, your expenses are likely to shift. It’s important to have a plan for how you will cover any new or unexpected expenses. Set new savings goals that are aligned with your current financial situation.