Written byĚýCassidy Horton
Whether you’re a traditional or nontraditional college student, going to school online or at a campus, building a budget is an essential skill that will serve you long after graduation. However, things like inflation and rising interest rates can make it challenging to plan for your future after college.
But it’s not impossible! In this article, we’ll explore six steps you can take toĚýeffectively budgetĚýas a student, even in economically uncertain times, and provide tips toĚýmaximize your savings.
Budgeting isn’t about deprivation. It’s about making smart choices with your money so that you can enjoy the things you love while also saving for the future. Here’s how to do it when planning for college.
Before you can build a budget that fits your lifestyle, you need to understand your current expenses. This helps you get an idea of where your money is going andĚýgives you a baselineĚýto work with.
The easiest way to do this is to pull up your bank and credit card statements for the past two months. Then,Ěýdump your transactions into a spreadsheetĚýand categorize them based on groceries, transportation, credit card payments, college textbooks, tuition and fees, utilities, entertainment and so on. This might take an hour or two, but you only need to do it once. The goal of this exercise is to get a rough idea of where you spend your money.
Right now,Ěýyou may think you know how much you spendĚýon things like food and transportation, but you’re likely underestimating if you’ve never tracked it before. Driving to and from campus for class or to a coffee shop to study adds up.Ěý
Plus, inflation makes everyday goods and services cost more. That means even if you’re buying the same groceries, you’re likely paying more than you did a year ago.
This step is crucial for building a college budget that actually works, so don’t skip it!
The second step in creating a budget is to assess your income. Strictly speaking, your income is your salary or wages. But you should also consider other monies you receive, like scholarships, grants or student financial aid — anything that can be applied to your living expenses and tuition. Make a list of everything you earn or receive and add it up. This will give you an idea of how much money you have to work with each month.
A money leak isĚýany expense you may not be aware ofĚýbut that is slowly draining your finances. These expenses can be small, but over time they can add up to significantly impact your overall financial health.
Money leaks take many forms, such asĚýsubscription servicesĚýyou no longer use,Ěýimpulse purchasesĚýorĚýunnecessary fees and charges.
Using the spreadsheet you created in Step 1, identify three money leaks you could reduce or cut out this week. Ask yourself questions like:ĚýĚý
By cutting out unnecessary expenses, you can free up more money to put toward your financial goals, such as paying off student loans or saving for an emergency fund.
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Another important step in budgeting for college is setting financial goals. These goals should beĚýspecific, measurable, achievable, relevant and time-boundĚý(SMART).
For example, you might want to start an emergency fund so you can:
Whatever your financial goals may be, take five minutes to list out three of them and why they are important.
After you review your income and expenses and identified some financial goals, it’s time to create your spending plan. The easiest way to do this is with a budgeting app, likeĚý,ĚýĚýor one offered by your bank.
To make the most of this step:
Budgeting is not a one-and-done thing. Your expenses and income can fluctuate from month to month or semester to semester as a student. Therefore, it’s important toĚýthink of your budget as a living document that needs to be adjusted regularly.
For example, one month you might have unexpected car repairs or medical bills that require you to cut back on other expenses. Alternatively, you might have a higher income another month due to a bonus or overtime pay.
By thinking of your budget as an evolving tool, you can stay on top of your finances and make adjustments as needed. This can help avoid overspending or falling behind on financial goals.
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As a student, you’re likely looking for ways to save money and stretch your budget. Here are some ideas for maximizing your savings — even when inflation and interest rates are high:
Christine Conway, director of financial education initiatives atĚý°®ÎŰ´«Ă˝,Ěýexplains that every student shouldĚýtry to borrow as little as possibleĚýfor college. This is one smart way to maximize the amount you’re able to save over your lifetime.
Understanding the cost and debt is just one piece of it. Students also need to haveĚýaĚýrealistic approach to repayment.
“Many students say they’ll borrow more now and start paying back while in school,” Conway explains. “But over the years, student loan service providers have told us that hardly anyone pays while in school.”
Conway says that if you don’t need the money right now, don’t borrow it sinceĚýyou’ll start accruing interest instantly onĚý.
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You can reduce expenses in several ways and save money as a college student. Consider these tips:
Admittedly, this is easier said than done. But there are opportunities beyond getting a promotion or another job. (Although that is an option!) Consider the following:
In the end, budgeting and saving aren’t rocket science. They are, however, contingent on discipline and organization. Luckily for students (and their bank account), those are skills that can be learned and applied immediately.
ABOUT THE AUTHOR
Cassidy Horton is an academic advisor turned finance writer who’s passionate about helping people find financial freedom. With an MBA and a bachelor’s in public relations, she’s had the pleasure of working with top finance brands like Forbes Advisor and PayPal. She’s also the founder of Money Hungry Freelancers, a platform dedicated to helping freelancers ditch their financial stress. In her spare time, you can find Horton hiking in the Pacific Northwest and cuddling her two cats.
This article has been vetted by °®ÎŰ´«Ă˝'s editorial advisory committee.Ěý
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