When you’re in college, every penny counts. There’s a reason college students are stereotypically known to survive on ramen!
College is likely the first time you’ve lived “on your own,” and although you may have had part-time work or a job before, planning out your income and expenses may not have been a necessity.
So, how do you set up a first-time budget as a college freshman?
We’ll walk you through it right here.
1. Gather your info.
Before you start, you need to know three things:
- Obligations (monthly payments, school bill, etc.)
- Discretionary spending (i.e., food, gas, clothing, entertainment, etc.)
Once you have determined how much money is going out each month (or made some educated guesses), it’s time to set up a budget. You might be saying, I don’t need a budget I have plenty of money, plus I hate feeling restricted. Reset your thinking by realizing a budget isn’t a restriction – it’s a protective boundary you’ve put up to ensure your financial stability.
2. Choose a budgeting tool.
The next important part of budgeting is to use a tool. Those who track their budget online and in an ongoing way are more likely to stick to their budget, according to the Wall Street Journal.
Find a tool that works for you. One of the most popular tools is Mint. Mint is a free app that provides you with many different ways to work with your money, but the one most used is the budgeting tool. You can link your bank, credit cards, establish a budget and receive alerts all through this one app – it’s quite effective – if you use it. Regardless of the tool you use, find one that works for you.
Even if you aren’t financially strapped, a budget can help you reach future goals while teaching you discipline. However, you might say, why even budget, I have no money. That’s where the tracking comes in – by seeing where your money goes, you become aware of the hidden expenditures and provides you the ability to apply discipline rather than caving into a whim.
3. Start tracking.
One of the best ways to get an accurate picture of your spending is to track it. It’s best if you can do it for a least one month. Tracking will show you hidden downfalls and potential areas that you can cut. For example, $4 a day on your favorite latte doesn’t seem like much, does it? But $4 every day of the year adds up to $1,460. When you realize how the small expenditures add up, it makes you reassess everything.
Lastly, recognize that you will have setbacks – pitfalls will most definitely come your way. However, if you did your tracking right, you will be aware of these potential setbacks ahead of time and can plan for them. For example, how much are you spending on beverages each month? Subscriptions to Spotify or Netflix? All of these may seem little, but add them up, then see the monthly total – it might surprise you. Anticipating pitfalls or potential pitfalls will help you stay on budget, and staying on budget will help you reach the goals you want to attain.