Budgeting is the best way to make sure that you know where all of your money is going each month. By monitoring all of the money coming into and going out of your accounts, you will be more aware of your spending habits and can make changes as needed to reach your savings goals! Depending on how much time and effort you’re willing to invest, you can make your own budget system or simply input your information into one of the many budget tracking systems available. Follow these steps to get started!
- Decide how to monitor your budget. You’ll need a way to track your individual purchases and overall spending habits. You can use an app like Mint, make your own spreadsheet, or check out this Student Caffé blog post for other ideas. Note that if you choose to use an app like Mint, you will have to provide login information for any accounts you want tracked. It is definitely convenient because the app connects to your accounts and monitors all of your transactions for you. It then tracks your spending and compares your expenses to your set budget. Although apps like Mint always try to protect users’ information, if you have concerns about privacy, you can always make your own spreadsheet to monitor your budget. You will have to enter all of your transactions by yourself, though, which takes some dedication.
- Calculate your weekly, biweekly, or monthly income. As a student, you may not have a lot of income, but anything that goes into your accounts—even birthday money—counts. Add up your paychecks and any other money you expect to receive. You’ll want to know how much you have coming in so that you can track where each dollar that you earn goes every month. You may also find it beneficial to track when you get paid in relation to when any bills that you’re responsible for come out of your account (whether automatically or by check) to ensure that you always have enough money to cover your recurring expenses.
- List all necessary bills (rent, utilities, vehicle payments, etc.) and subtract them from your monthly income. Find out exactly what amount each bill is comes to each month, or if it is variable, estimate. Remember that it’s always a good idea to estimate on the higher end to make sure you’ll have enough money to cover your expenses. Look through your bank statement(s) to make sure you include any recurring bills. Don’t forget things like car insurance, books, and tuition payments, which may only be paid out once or twice a year. Again, you may not have that many bills as a student, but getting in the habit of tracking them will be helpful when you’re entirely responsible for your expenses.
- Put any money leftover after all bills are accounted for into groups. Try to make sure that each dollar has a dedicated spot, whether it goes toward food, clothes, or school supplies, and be realistic about your spending in each group. It might be useful to look at your spending for the last three months to get a good estimate. If you don’t have enough leftover money to cover your costs, decide what you can live without, and reappropriate your income accordingly. Building in some padding, too, by not dedicating every leftover dollar toward a spending group. Make a savings group, too.
- Set realistic goals for spending and savings. If you know that you generally spend $100 on coffee in a month, don’t budget only $5 if you don’t really plan to stick to that. (Alternatively, if you want to cut back on spending, the $100 that goes toward coffee is a good place to start.) Figure out what you can actually afford to spend and save, and adjust your budgeted amounts within that restriction. Experts commonly recommend having at least three to six months worth of expenses in your savings account in case of an emergency. As a college student, it may be difficult to save so much given that you may not be working during the school year or the summer. Keeping a budget, then, will help you build up your savings account slowly but surely in case you need to buy a last-minute plane ticket or pay for unexpected medical procedures. Having a cushion in the event of an emergency is a wise idea.
- Watch and adjust as needed. If you live off campus and find you’re spending more than you expected on food, consider whether you can afford it. If not, figure out where the extra money is going. Are you spending it at the grocery store or eating out? Cut your grocery bill by using coupons (many are available within apps like ibotta), buying the store brand versions of items you usually purchase, and meal prepping for a few days or a week at a time. Meal prepping may also help cut down on spending at restaurants, as you’ll have food that’s convenient and easy to heat up.
No matter what method you use to track your finances, after you create a budget, the key is to stick with it! It will need fine-tuning in the first few months until you find a balance. Occasionally an emergency or unexpected expense will come up. With a good budget, though, you will have the savings available to cover all of your expenses without too much worry!