THERE are many ways you can go about creating a budget, including using a budgeting app that connects to your bank accounts or making a spreadsheet with an online template.
Whichever resource you choose, remember to stick to it and hold yourself accountable so you can achieve your money goals.
Here’s how to create a budget as a college student.
Calculate your net income
While in college, you may be working a part-time job or internship to help pay for your education and afford everyday expenses. You might also have an income from grants, scholarships, loans or a monthly allowance from your parents.
The amount of money you bring in each month is an essential part of your budget and creates the foundation for how much you can afford to spend.
As the first step in creating your budget, you’ll want to calculate your net income, which is the amount of money you earn less taxes.
If you receive a regular paycheck through your employer, regardless of whether you’re part-time or full-time, the amount deposited into your checking account is your net income.
List monthly expenses
Next, you’ll want to list all of your monthly expenses. Here are some common college-related expenses: Be it school supplies (such as textbooks and electronics), rent, groceries, transportation etc. It is helpful to include savings so you remember to put money aside for future goals.
Organize your expenses into fixed and variable categories
After you listed your monthly expenses, it’s time to categorise which are fixed and which are variable. Fixed expenses are bills you typically can not avoid and need to pay, including text books, rent/room and board, groceries, transportation, insurance and debt repayment.
Variable expenses are more flexible and often include wants, like a gym membership, travel, dining out and entertainment purchases.
Determine average monthly cost for each expense
Once you label fixed and variable expenses, list how much you spend on each expense per month. Refer to your bank and credit card statements to get the amount.
Many fixed expenses you incur will typically be the same month-to-month, making it easy to put a dollar amount to the cost.
For instance, your rent/room and board, meal plan, insurance and phone bills will likely cost the same each month. Some variable expenses may also have a set cost every month, such as your gym membership.
The last step in your budgeting process is to compare all the information you gathered and make sure the numbers work out. Look at your net income compared to your monthly expenses and see if you have enough money coming in each month to cover all your costs.
If you can not afford your lifestyle, it’s time to make adjustments. While you can consider ways to make more money, like picking up more hours at work, you should also think about ways you can cut costs.
If you are looking to move, find an apartment with cheaper rent. And if you have money leftover after creating your budget, consider putting it toward any outstanding debt, like a lingering credit card balance, or use it to start saving it for the future.
Now that you have put the hard work in and finished creating a budget, it is important to stick to it.
Following your budget while in college can help you pay off debt and graduate with strong financial habits that can help you achieve long-term life goals.
To stay on track, hold yourself accountable by setting up reminders to log expenses into your budget every day. If you decide to use a budgeting app, set alerts when you approach your spending limit for different expense categories.
You can also set up transaction alerts with your bank or credit union that notify you if you approach a predetermined spending limit.
If there’s ever a change in your income or an expense, make sure you adjust your budget accordingly to avoid any mishaps.— TeenKidsNews