Transitioning from living with your family to living on your own can be difficult change. New surroundings, new people, new classes, and so much more can make it difficult to navigate. Another new experience for many is keeping track of your own money and learning how to spend it responsibly. If you had never had to pay for essentials like food and living costs, you may spend way too much or way too little and not have all the things you need. It is important to understand what your most important costs are and how to make sure you can afford them. Here’s some tips to get you started on your budgeting in college.
The first step to budgeting effectively in college is knowing your spending allowance. Make sure you know how much money you CAN spend. Take an honest look at your bank account and take into consideration if you have an income, or if you get money from your parents each month and make a limit of how much you can spend. I try to plan per quarter because my spending stays about the same each quarter. Whether this is per week, month, or quarter, it is important to know your limits so you can plan your spending accordingly.
Once you know your limits, make note of all the things you have to spend money on. For example, books, gas, and groceries. Once you know the things you need to purchase, you can estimate the costs per week of each item to gauge how much money you will be spending. To do this you should separate each spending into a category such as food, living costs, school stuff, bills, etc. From here you can see if you are spending too much money and adjust accordingly. For example, you could drive less to save gas money or try to find cheaper versions of your textbooks. Note: When purchasing textbooks, look for alternatives before spending hundreds of dollars. There are free virtual Openstax textbooks, some teachers have PDFs you can find, or Amazon/Ebay may have your book for way cheaper to rent than purchasing at the bookstore.
The next step is to differentiate the things you need vs the things you want to purchase. This can be anything from makeup to clothes to new decorations for your room or anything that isn’t essential. My best advice for deciding what and what not to buy is setting a limit of spending on nonessential items per month. For example, I can buy one new item of clothing this month. Setting these limits not only helps you budget but also helps you realize what is the most important to you right now. Instead of going on a shopping spree where I will only wear half the clothes I buy, now I buy very few items that I love and wear all the time.
Now that you have assessed your expenses and income, you can put your finances into a google sheet. To do this you first create income and expense categories. Note: specificity helps you maintain better control of your finances, you may want to add subcategories to more closely track certain expenses. Next decide What Budget Period to Use. You may want to budget daily, weekly, bi-weekly, monthly, or yearly. Which period you use could depend on: pay frequency, how closely you want to monitor your finances, or how much time you want to spend updating your budget spreadsheet. For each budget period, you’ll want to create three columns: your budget, your actual spending, and the difference. And that’s all there is to it!
Make sure you set some encouraging goals for yourself when you first start out. Remember this is a continuous process so if you overspend one month you can always make it up the next month. So just do your best, budgeting takes some time to get used to. With these tools you’ll get the hang of it in no time. Now you’re ready to budget like a boss!