When it comes to college students, I hear this complaint a lot: There should be a life skills class in college. Why don’t they ever teach us how to pay our taxes? Or how make our first college budget? Where am I supposed to learn that?
I’ve often thought these things myself. Filing taxes for the first time was overwhelming and confusing for me, and I haven’t learned to balance a checkbook since Home Economics in seventh grade. When I started earning my own money through this blog, I wasn’t sure how to budget, list my expenses, or plan for the future; they were skills I had simply never learned. But through the help of friends and many online resources, I learned to make a simple college budget that’s given me freedom, security, and peace of mind. Best of all, today I reached my first savings goal!
Read on to learn how I did it, and how to make your first college budget.
Pick a time frame
College students are lucky in that we get a fresh start a few times a year. Your employment and expenses may be different during the Fall semester, the Spring semester, or Summer break, so it’s probably wise to set your first budget within one of those timeframes; either a semester or a long break. You could also choose to do a month-by-month budget.
Make a list of your income
Many college students work irregular hours or have irregular income due to factors like tips and overtime. If this is the case for you, make a low-budget guess of your income — the lowest it could realistically be. This way, you won’t set a budget that you can’t always afford. Also include monetary gifts and allowance, if you receive those.
List your expenses
Coming up with a complete list of your expenses off the top of your head can be challenging, so start with the big-ticket items: tuition, student loans, food, rent, etc. You can pull out some previous bank statements (or download them from your bank’s website) to see what you’re regularly spending money on).
Here are some costs to consider. Don’t be scared! Since you are a college student, your parents may pay some of these for you; in your personal budget, only include the costs you yourself are paying.
- College expenses: tuition, fees, books, school supplies
- Living expenses (on-campus): college room and board, meal plan, food costs for non-meal plan
- Living expenses (off-campus): Rent, water bill, energy bill, insurance, food costs
- Transport: public transportation, car payment, car insurance, gas, parking
- Medical costs: prescriptions, health insurance
- Communication: cell phone, wifi
- Personal expenses: clothes, hygiene, hair cuts, etc.
- Debts: student debt, credit card debt
- Entertainment: Netflix, take-out, going out, etc.
Fixed vs. Variable Expenses
Some expenses are regular, like rent, insurance, and debt payments. Others depend on the time of year: you only pay for textbooks in September and January, for example, and your haircuts or prescription costs may happen on an as-needed basis. If you have several of these “variable” expenses, rather than listing them individually on your budget, make them a category like “extras” or “other.”
Wants vs. Needs
If your expenses are a mile-long and you need to start cutting corners, make a distinction between “wants” and “needs.” Food, prescriptions, and insurance are “needs” that should always be included in your budget. Netflix and take-out, not so much. Scrap the wants in order of least important to most important until your expenses are more manageable.
You want to plan for a little wiggle room, because no one is able to stick to their budget 100%, all of the time. 10% wiggle room for expenses is great, if you can afford it; if not, choose a small percentage or number that will prevent you from having to deal with overdraft fees.
Savings is an important area of your budget, but it’s the one most overlooked by college students. You want to save in a few different areas; saving for big-budget items like a new laptop, for example; saving for an emergency fund the next time you need to fly home to see your parents; and long-term savings so that you always have a financial safety net.
While the general rule for savings is “as much as you can,” 10-15% of your income is the recommended amount, and up to 20% is great if you can. Put this money in a savings account and leave it there except for emergencies or major planned expenses.
Balancing Your Budget
Here’s the basic equation for putting together your budget:
Income + Gifts + Allowance ≥ Fixed Expenses + Variable Expenses + Wiggle Room + Savings
That is to say:
Total money in ≥ total money out
The money you receive or earn every month should be more than the money you spend and save put together. If you subtract for expenses, savings, and wiggle room from your income, gifts, and allowance, and the answer is a positive number, then you have a balanced budget. If it is a negative number, then you need to cut back on expenses or savings.
Reviewing Your Budget
Next, take a step back and make sure that the budget you put together reflects you and your values. Do you care about charity or tithing, but leave it out of your budget? Or do you feel you’re spending more or less in a certain area than you want? Reflect, tweak, and re-balance until you’re happy with your answers.
Sticking to Your Budget
In the modern day, sticking to a budget is easier than ever. I love using Mint, but have also heard good things about Manilla and BudgetTracker. If you’re reliable and will be sure to be honest with yourself, you could even use an Excel or Google Sheets spreadsheet.
Here are some great budgeting resources that I found really helpful in making my own budget and writing this article:
- College Student Budget Worksheet by College in Colorado
- How to Set a Savings Goal by the Money Advice Service
- And Adult Budgeting 101 by LifeHacker, for those of you entering the real world!
That’s all for now, but let me know in the comments – what’s your #1 budgeting tip?
This post was originally published SaraLaughed.com. It has been modified and improved for use at College Compass with permission of the author.