Starting a Practice of Budgeting
With the college experience comes new expenses thanks to new independence. Some students may enter college well versed in financial management and budgeting, while others may just be starting a practice of budgeting. We’ve compiled some of our best tips for budgeting for college students.
Talk with your family
Each family has a different expectation about the financial participation of parents and students during the college years. Rather than assuming who will be paying for what, make sure you talk openly about who will be covering what expenses. Beyond tuition, college costs include room and board, meal plans, text books, participation fees, transportation, and more. An important part of starting a practice of budgeting is to create a plan with your family to make sure you’re on the same page regarding expenses. It’s important to know if you will need to work, and how much, to cover your expenses while in school.
Create a line-item spreadsheet
If the word spreadsheet gives you hives, hang in there! We’re only suggesting that you should know what kinds of things you will spend money on in college. List out the things you know you will want to buy or participate in during the school year. Include the academic stuff, like textbooks, supplies, technology, and discretionary spending, like eating out, transportation, clothes, and entertainment. Starting a practice of budgeting will give you a realistic starting point for spending each month and prevent extra costs from sneaking up on you if you do a thorough job with your list.
Track your spending
When you’re starting a practice of budgeting, you’re likely going to do some guessing about how much you think you’ll spend on certain things. The only way to know more accurately where your money is going is to track it. NerdWallet provides an easy to use, free budget worksheet to help you get started or you can use any of these other highly recommended apps. Once you know where your money is going, you can make cuts and adjustments where necessary. You may be pleasantly or not so pleasantly surprised at what you actually spend each month.
Begin to save (or keep saving)
It’s never too early to start saving. Financial guru Dave Ramsey is a strong advocate of setting aside money for the future, no matter how little you have right now. An 80/10/10 principle is a common best practice when you are starting a practice of budgeting. 80% of what you make is for spending, 10% is for saving, and 10% is for giving to church or other charitable organizations. If you’re not in a position to set aside 10% for each of those categories, start with what you can. Any amount is better than none and will accumulate quickly over time.
Budgeting for college students is an essential skill. If you’re starting a practice of budgeting, talk to your family, create a spreadsheet, track your spending, and start (or keep) saving. These four tips will help you begin to practice good stewardship and avoid debt in college and beyond.