We’ve all heard the familiar phrase, “I’m a college kid. I’m broke.” If you’re a college student, you’ve probably suffered the sadness of seeing something you want but knowing that your bank account is sitting at a beautiful -$5.70. Or, maybe one day you went to the store to pick up 16 items that you thought would only cost you about $20, and then they turned out to be closer to $70. The biggest problem with this is a lack of budgeting. But it doesn’t have to be hard. Budgeting can be broken down into a simple four step process.
1. Figure out how much money you’re working with.
Ask yourself where you are getting money from every month or week. If the answer is nowhere, think about applying for a job, whether that’s on or off campus.
If the answer is from your parents, then determine what that amount will be. For the rest of the article, we’re going to say you receive $500 a month from your parents and design a budget that gives you everything you need while still saving money.
If the answer is bi-weekly from your job, or at the end of the month, then see how much you can expect for each paycheck. For the rest of the article, we’re going to say you make the minimum wage of $8.05 an hour and you work part-time, about 20 hours a week.
2. Create your budget
Create three to six categories. These categories will be what you think you need for the month. Food is top priority, so you’ll need one for groceries. Also create one for pocket money, an emergencies and savings fund, and an unexpected expense category, which and does need to be different from your savings.
Groceries– Usually bought every two weeks, having a budget for groceries can help you from splurging on things you don’t need in examples like that giant bag of skittles you bought because you thought there would be some left for Halloween and consumed it in less than an hour.
Pocket Money– It’s always smart to have cash on hand. Whether it’s needing to pay a friend back, wanting to donate a bit of money to a fundraiser, or having something when you’re missing your debit or credit card, it pays to be prepared.
Emergency/Saving Fund– Save for a rainy day! Let’s say one day you get into an accident and you need a decent sum of money to pay for the damages. If you don’t have these savings built up, you’ll be scrambling for money and probably paying a visit to mom and dad!
Unexpected Expenses– Similar to the emergency/saving fund this is an expense that comes out of nowhere. The difference here is that this expense is incurred by a mistake you make that is minimal; For example, losing your friends nose ring, or breaking your friend’s phones case, or throwing out your favorite pair of shoes on accident.
3. Figure out the percentages for your budget.
This is simple, you have 100 percent and you’re going to break it up evenly. So using the four categories from the previous steps, and the budgets from earlier I will show you how it would work out. A great tool for that is Microsoft excel, google sheets or just make a grid. You’re going to want to make the most important parts of the budget the most percent heavy. We’ll start with the budget of $500 a month:
Note: the emergency fund isn’t taking up all of the budget. Also, your most important expenses are covered.
The next scenario is your job where you get paid bi-weekly $8.05 per hour and you work 20 hours a week ($322 a month):
Note: I added another category. This is just to show how the budget is adjustable. The only hard and set rule in budgeting is sticking to your budget after you make it! Which brings me to my next and final step.
4. Track your spending!
Your budget is worthless if you don’t stick to it. I’m not saying you’re going to go under if you spend more money on gas than you planned. Just remember that you have less money for one or more of your expenses later.
My biggest suggestion is learning how to use a spreadsheet system for your budget to help track it. In the spreadsheet, you’re going to create a two or more columns (note: you have the category column, the percent column, and the dollar amount column) these columns will be called “What I bought and where” and “Amount of money left.” Here’s What it looks like in practice:
All in all, budgets aren’t hard! You just have to work within them!