You may be a whiz at physics, a great water polo player or a talented musician, and it is hoped that your college years will be a time for you to exploit your talents, expand your mind and begin to fashion your life as an independent adult. But if you are living away from home for the first time, and you fail to handle your expenses while in school because you’ve never learned to manage your money intelligently, college can be a time of worry, debt and increasing financial difficulty.
In order to concentrate on your education, while also enjoying your extracurricular activities and social life, you’re going to have to create a spending plan in which your fixed and variable costs over the span of a year are equal to, or less than, the financial resources you have at your disposal. In other words, you’ll need to create a budget that is realistic, but flexible enough to adapt to the changing circumstances of college life.
Sticking to a Budget while in College
This is not rocket science. In fact, the math itself is very easy. The challenge is not in the making of the budget; it’s in the sticking to it. Once you’ve created your budget, you need to make it your master or you will find yourself running through your money very quickly and digging a hole that may be difficult to climb out of. Obviously, your first year in school will be a time to experiment with your spending choices, especially when it comes to discretionary purchases.
But first, it’s necessary to determine how much money you have and which college costs are fixed. These are numbers that shouldn’t vary over the span of the school year. To begin, you will need to list all of your sources of income, including:
- Money you make from a part-time job, summer employment, or work-study.
- Funds from your parents.
- Student loans, grants or other forms of financial aid.
- Miscellaneous sources of cash, such as gifts.
Some of your costs are fixed, which means the amounts don’t vary much and you know their due dates. For example:
- Tuition and fees.
- Room and board if you live on campus (rent and utilities if you live off campus).
- Books, equipment, classroom supplies.
- Car loan.
- Credit card accounts.
- Car insurance or health insurance premiums.
- Cable TV.
- Phone bill.
Once you subtract your fixed costs from your total income, you will know how much disposable income you have left over for flexible costs that are irregular in nature, including:
- Snacks, drinks, groceries and eating out.
- Social and recreation expenses, such as movies and sporting events.
- Transportation, including car maintenance and parking fees.
- Personal expenses, including laundry.
- Health care, including prescriptions and co-pays.
Hopefully, your estimate of these flexible costs does not exceed your available income and still leaves some money to put into an emergency fund or savings account. As the semester progresses, you will have to track all of your expenses and determine where you may be over or under budget. Remember that sometimes you’ll spend more than at other times. But if you continually review and modify your plan, every week at first and then every month, you can find ways to re-allocate your spending so that everything balances out over time.
By the end of your first college semester, you should have a very good idea of how much you can spend in each category and where you have room to maneuver. There are many budget templates available online that you can utilize for planning purposes, or you can simply make your own form in a spreadsheet program.
Don’t make the mistake of being blasé about your finances. Write everything down, and take your budget seriously. This is one test that you can’t simply retake.