College graduates never forget how poor they were while they were completing their undergraduate and/or graduate degrees.
I mean, how could you?
You know what I mean…eating ramen too many nights in a row, stealing food from the dining hall, and buying the cheapest beer possible.
It’s important for college students to budget their money, no matter how poor they are, so they can stretch their dollars as far as possible. The common misconception is that because someone has so little money, it’s impossible to live on a budget. The less money you have, the more important budgeting is. Here’s some tips and tricks every college student should know about budgeting.
You need to be honest about your spending
Before you construct your budget, keep a log of everything you spend money on for a month or two so when you analyze the data, you have a really accurate financial picture of where your money goes. If you need some help putting together your own personal spending report, try this tool developed by Wells Fargo.
The more you know about your spending habits, the easier it is to develop a budget because you know where the money is going. If you find an area where you’re spending too much money – like eating out – you can reflect that awareness in your budget and set a strict limit for how much dining you can absorb each month and avoid being broke all the time.
List your income and expenses
You need to know roughly each month how much money you will earn through allowances from your parents, money you earn from a part-time job or a work-study program, and from grants, scholarships, or student loans.
The money you have left over after the school takes their cut from your financial aid, plus either your taxable or non-taxable income, is the amount of discretionary funding you have. Your budget should be based on these discretionary funds.
Look for places to save money
After you put your budget together into categories like: Food, Housing (if you live off-campus), Transportation, Savings, and Discretionary, you should have a pretty good idea where you can trim back expenses.
If you have $200 a month in your transportation budget line for gas, but you only need $100 a month, then consider moving that $100 a month into your savings account. If you do the math, and you’re running a deficit, you need to figure out where to cut costs.
Start using your meal plan, or cooking at home if you have to choose between gas for the car so you can get to campus and home for holidays. Eat out once or twice a week instead of every night. When you feel the impulse to order Chinese from GrubHub, go to the grocery for the ingredients instead.
At age 18, you are your own person in the eyes of the law. Apply for food stamps and Medicaid if you’re uninsured. You qualify in most states if your taxable income is less than $1600 a month. Don’t spend it, if you don’t have, too!
After reading this, if you still need help creating a budget that works for you, make an appointment with a financial aid counselor on the campus. Not only will they be able to help create a realistic budget, they might even be able to find a little extra money laying around to make ends meet.
Need more ideas for budgeting? Check out my personal budgeting strategy.