College students will usually roll their eyes when you mention their need for a budget at college. You might be rolling your eyes right now. But the truth is this: An easy-to-follow budget can help you spend wisely (or should we say, not foolishly) and keep you out of financial trouble. Well, except for the financial trouble that comes with a hefty amount of tuition debt. But a budget will help you resist the “buying urges” that often make paying for “after-college life” difficult.
First and foremost, add up how much money you have to spend each week. Include every source of income you’re expecting. Is your mom or dad promising you a weekly allowance? How about Grandma or Grandpa? Are you a distant cousin to Bill Gates? If you’re one of the lucky few who have more scholarship money than the cost of your education, be sure to include that, too. Do you work a part- or full-time job? How much do you bring in on a weekly basis? Once you have a grand total, divide it by the number of weeks you’ll be at school.
Have you checked on the cost of living in your college town? In other words, a trip to the movies in Chestertown, Md., is only $7, but a trip to the movies in Manhattan on the Upper West Side is $13. That difference of $6 is pretty large when you’re trying to make a monthly allowance of a couple hundred dollars work for you. Other basic costs to check include local restaurants, laundry costs, taxi fees and any other extremity expenses you might find personally useful (like a gym membership, fraternity and sorority dues, and college clubs that might have some costs involved).
All of your college costs can be put into two categories: fixed costs and changing costs. For some of you, fixed costs include a monthly tuition fee and room and board. If you’re paying for these items on a monthly basis, you need to include them in your budget. And also, some of you might have car payments, insurance and parking fees. Your inconsistent costs might include entertainment (movies and food), gasoline, toiletries, clothes, car maintenance, books, cell phone bill, club dues and/or expenses that might be personal to you.
OK, so after listing your expenses and figuring out your weekly costs for both fixed and changing expenses, add the amount (your fixed weekly costs to your changing weekly costs). The number you get becomes your total amount for weekly expenses.
Now’s your turn. Remember that income total you came up with? Compare that with the number you totaled for your weekly expenses. Here are two potential scenarios:
If your expense total is lower or equal to your income amount, you’re in good shape! Sing praises. Jump up and down. Do a little celebratory jig.
If your expense amount is higher than your income amount, you’ve got a problem. This pretty much means you’re planning on spending more than you’ll have on hand. But don’t worry: this is why we do a budget, to avoid such situations. You have a few choices.
You can cut something from your budget. One way to do this is to decide you’ll never eat any food outside of the college cafeteria, and then you can simply change the food dollar amount from whatever it is right now to zero. But honestly cutting an entire amount might be difficult.
You can also lower your spending amount on several items within your budget. Take $10 off of meals, $40 off of clothes and so on.
One last thought about budgets: Creating a budget gives your parents and you a good chance to talk honestly and openly about money. I highly recommend you discuss your financial needs with your parents if they’re available to you. Do this no matter your parents’ financial commitment to you or their financial status. Some parents let their kids earn their own “spending money,” and that’s fine. Other parents pay for absolutely everything. Whatever your situation, talk to someone you trust (parents, guardian, grandparents, or aunt and uncle) about your financial budget. You never know what their insight might be able to do for your situation.
After you’ve finished listing your income, listing your expenses and talking with someone, either rewrite your budget neatly or put it into an Excel spreadsheet. And then look at it often! Oh, and a budget doesn’t work unless you actually follow it.
Matthew Paul Turner is a writer and speaker. He blogs at JesusNeedsNewPR.net. Adapted from Everything You Need to Know About College. Copyright © 2006 by Matthew Paul Turner. Used by permission of NavPress.