You’re halfway through the school year, and you feel like your finances are out of control. You don’t know how much you’ve spent, or what even you should be spending. It’s time to get organized.
But where do you start? Setting budgets is one thing, but you don’t have a full-time job. How do you adapt the budgeting process for a college student?
How To Create A College Budget
1. Determine What You’re Expenses Are
The step to creating a college budget is to consider everything that you need to pay for over the rest of the school year. If your parents pay for it, or the cost is otherwise covered (i.e., a scholarship), you don’t need to include it.
Examples of things to budget for include:
- room and board (or rent, utilities, renters’ insurance if off-campus),
- program fees,
- school supplies,
- gas and auto insurance, if you own a vehicle,
- sorority or fraternity dues, and
- any travel costs if you plan to go home over Spring Break.
Some of your costs will require you to make an estimate. You may not know what your entertainment budget should be. But I bet you have a rough idea. Take a guess and be on the conservative side. At this point in the budgeting process, you want to overestimate.
Sum up all your costs and multiply by 10%. Add a line for this amount. This is your buffer for errors – errors while creating your budget, or errors in judgment while spending your cash.
2. Identify Your Sources of Income
Determine all the income you plan to receive or earn throughout the remainder of the school year. Do you have a part-time job, do your parents deposit money into a bank account on your behalf, or do you have cash in your savings account that you will use to fund your last semester of college this year?
Write down all your various sources of income and tally them up.
3. Fill In The Gap (aka balance your budget)
Subtract your expenses from your income. You will always have a difference. Most likely, your costs will exceed your income. Your goal at this step is to reduce your income to expense gap to zero. You can do this by increasing your income, decreasing your expenses, or a combination of the two.
Review your expenses for estimates that have some wiggle room. Perhaps you’re able to contact the vendor and get the exact amount. If you budgeted for a part-time job, you might want to consider increasing your hours. What about asking for a raise.
At this stage of the budgeting process, it becomes a puzzle. You’ll need to make some decisions and then determine what actions you need to take to balance your budget. Some of these decisions will be easy, and some will be hard.
4. Track it and Evaluate it
Compare your actual transactions to your budgeted transactions periodically. I recommend daily. While this seems excessive, the more often you document your actual spending, the less time it takes each time.
I recommend using software that syncs with your bank to automate as much of the process as possible. I use You Need A Budget, but it’s not free. There is some budgeting software that is available at no cost. Examples include EveryDollar and Mint. You can also use a simple spreadsheet via Excel or Google Sheets with one column for your budget, another column for the week, month, or semester (whichever you choose), and a variance column.
Evaluate your budget to actual calculation regularly — life changes, often in an instant. A good budget is flexible. You may need to move budgeted dollars from one category to another. For example, if you planned to buy used books, but your Calculus book is available only new, you can move dollars from your entertainment budget to cover the overage. Alternatively, you can plan to work an extra five hours to cover the cost and not need to adjust your expenses.