How to Create Student Budget and Stick to it

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How to Create Student Budget and Stick to It

College is the first step toward independence for many young people, but don't neglect financial independence in your rush to exercise your new social freedom. Most students won't have sufficient income during college to start putting away money for the future, but everyone needs to learn budget basics — how to make a money plan and stick to it.

Calculate Your Expenses

The purpose of a budget is to plan where to spend the money you have or make. The first step is to list the costs you must pay during a year at college, including the two big ones — school expenses and living costs. 

Include your annual tuition in school expenses, as well as nonresident fees if applicable, and books, supplies and mandatory services like fees the school may charge students to use the gym or clinic. 

Living expenses include the cost of your dorm room and meal plan if you live on campus. Calculate rent, utilities and food budget if you live off campus. You'll need to add in money for clothes, phone, leisure activities, entertainment and also health insurance.

Don't forget transportation expenses: tickets to college and home again, and bus fare or automobile costs like your car payment, insurance, registration and maintenance.

Calculate Your Income

Your second task when preparing a student budget is to add up all your sources of funding, including money you've saved, money supplied by family, scholarships, student loans, etc.

Don't leave out work-study funds and money you'll earn from working during summers, vacations or even the school year. The trick is to have more income than expenses so if that isn't the case, figure out ways to get more money or trim your expenses.

Track Your Spending

The best way to stick to a budget is to figure out where your money is going, then compare it to your budget plan. Try tracking your expenditures for a solid month. Mark down every single dime you spend in a small notebook or your smartphone.

This can be an eye-opening experience. You may find that you spend far more for your morning cappuccinos every month than you allocated for your total monthly entertainment. Even a splurge on a single expensive outfit can ruin your clothing budget. Use the info you gain to identify spending issues.

Tips to Reduce Spending

If you're having trouble sticking to your budget, change your spending habits. Here are a few tips: 

  • Use a debit card and leave the credit card with your parents.
  • Calculate the weekly, monthly and annual costs of small indulgences like beer.
  • Reconsider the need for a car while you're in college if a bike would work just as well.
  • Participate in student athletics programs at school rather than joining an 
    expensive gym.
  • Keep student loans to a minimum (resist the temptation to take out a loan for more than you actually need).