Making the transition to college is a challenging rite of passage for most graduating high school students. There is the excitement of greater freedom to come and opportunities to pursue dream careers. That said, starting university life also means embracing more adult responsibilities. You will need to take on such duties as seeking part-time employment, making car payments, and paying rent.
If it is the first time you are in charge of your finances, college budgeting may seem tricky. Balancing the responsibilities of a job while holding yourself financially accountable can be overwhelming.
However, you need to understand that budgeting is vital since you will be operating with limited funds. Also, the money management skills you develop now could be crucial for your financial future. Here are some incredible budgeting tips from experts to keep you going.
- Create and Track Your Budget
When in college, keeping track of your spending may seem like too much work. However, since you will be working with limited funds, having a budget allows you to avoid unnecessary spending. Students who create and follow their budgets can distinguish between needs and wants, identifying expenses
Budgeting also helps students to live healthy and stress-free lives. There is no doubting the fact that college is stressful. According to a recent survey, 68% of students struggle with sleep problems because of financial hardships.
Budgeting helps you reduce stress by giving you a sense of structure and control over your finances. Most importantly, budgeting teaches valuable life skills that could be instrumental even after graduating.
To create a budget, you need to record your sources of income and document actual expenses. You may have noticed how quickly you run out of money. To track where your funds disappear, consider recording expenses and organizing your records.
Effective budgeting also means creating a routine. Most importantly, create room in your budget for emergencies and unusual expenses. Should you choose to buy assignment papers from professionals online, this kitty will be pivotal.
- Differentiate Needs and wants
If you wish to set aside some money for saving and living within your budget, you should understand the difference between needs and wants. Of course, most students already know that food and shelter are needs, and a coffee date is a want. However, after spending a whole night working on an assignment, that cup of coffee may feel like a need.
There will be things you need to survive in college, including a decent room, gas for your car, and food to give you energy. There will also be things you want, such as movies with friends and tickets to a show. There are ways to fit both needs and wants in your budget, but you need to prioritize what matters.
Understand that financial needs are those expenses that are essential for daily survival on campus. The expenditures are often recurring and will eat up a large portion of your budget. On the other hand, those expenses help students live a more comfortable life on campus.
These are things you could do without and are mostly bought for leisure or fun. However, they make college life more fun and memorable. They include traveling, entertainment, and fashionable clothing.
So how does a student account for needs and wants in their budget? Start by listing all the things you wish to buy. Once you have all your expenses listed, categorize them into broad needs and wants groups. For example, a basic phone, food, accommodation, and insurance fall under the needs category.
However, cable television subscriptions should be placed under wants. Half of your budget should be dedicated to meeting your needs, while the next 30% should go to wants. The remaining 20% should be set aside for debt payments and savings.
- Set Clear Financial Goals
One of the most important budgeting tips for college students is to set clear financial goals. For most starters, the goal is often simple — to set aside some money while fighting the urge to spend it on impulse purchases. With time, the goal grows into more ambitious objectives like starting an emergency fund, saving for a car, paying off student debt, or setting up funds to travel abroad.
Setting these goals and working towards their realization is crucial for establishing a healthy financial future. One of your most critical financial goals should be creating a budget and living by it.
It would help if you also considered paying off your student loans. Of course, your goals could change and evolve. Setting aside part of your money to meet the goals sets you up nicely for financial success.
You should keep these important tips in mind as you create and track your budget. Also, consider building credit into your budget. If possible, improve your sources of income by getting a part-time job. Never spend more money than you can afford, as this will get you into unnecessary debt.