Being your own budget planner isn’t easy, especially if you’re a student. Not only do you have to be careful with everyday spending on campus, but you also have to keep in mind that you’ll have to pay off student loan debt. That’s why the sooner you start controlling your budget, the better prepared you’ll be for any financial challenges you’ll encounter later in life.
The key to a comfortable life is to avoid quick-fire spending right now and work steadily toward fulfilling long-term financial plans. Here are some tips for college students on how to manage their budget without stressing over it.
Calculate Your Average Net Income
Paying off student loan debt is a serious matter that negatively affects millions of Americans. While there are effective methods of debt reduction, it’s best that you minimize the effect of the debt as soon as possible through budget control. And the first step in doing so is checking the amount of money that you have at your disposal every month.
Start by calculating your average net income so you can move on to monthly expenses and control both factors successfully. A net income, or your take-home pay, is the amount of money you earn, minus the taxes. If you have a part-time job, the paycheck you get is your net income.
The average net income is the money you have on you every week or every month. And it’s the foundation upon which you’ll plan your budget. When calculating the average net income, opt for conservative figures to avoid going overboard with spending.
Classify Monthly Expenses
With your income under review, it’s time to focus on your expenses. Your monthly expenses can include dizzying digits, quickly decimating your income. The trick is to put them on paper so you can’t turn your head from impulse spending here or there.
Expenses are the student’s biggest enemy, as most college students already have to limit the money they are spending. However, when you list these expenses, you gain insight into how prudent or ineffective each purchase is and how to minimize expenses as a result.
There are a few ways to build your list of monthly expenses. One of them is to organize all costs into two categories: fixed expenses which are unavoidable, and variable expenses that you’re able to dodge.
Fixed expenses include room rent, transportation, textbooks, and food. On the other hand, you can avoid variable expenses like buying brand-name clothing and footwear, going to restaurants and clubs, going to the gym, or paying for streaming and gaming services.
Another way to categorize your monthly expenses is to separate all payments into needs and wants. For example, paying off a credit card balance should be labeled as a need, along with attending college or putting aside a fund for emergencies.
However, buying a car or a game console is allocated to the wants section of your budget. That way, to strengthen your budget, you can focus on essential expenses and skimp on things you can actually go without.
Determine Average Costs for Expense Categories
The main reason why we make neat lists of our expenses is to have a clear overview of our monthly spending. Jot down how much you spend on fixed and variable expenses, comparing these two columns so as to be able to control your spending more efficiently.
Specific fixed expenses tend to have stable and predictable monthly amounts, for instance, rent and bills. Conversely, variable expenses such as buying groceries and gas can oscillate considerably.
By analyzing the expenses you’ve listed, you’ll quickly separate the unchangeable monthly costs from the changeable ones. You can manage your budget accordingly and take action to reduce the effect of fluctuating expenses.
Adapt on the Go
With a clear idea of your average net income and monthly expenditures, you’ll soon realize that you have much greater freedom in changing and modifying your budget on the fly.
We cannot emphasize enough how important it is to maintain an excellent grade point average. For starters, it can get you a merit-based scholarship and open up new financial opportunities. Additionally, with good grades, you can even save on car insurance.
Use your Student ID for discounts across the board, including FedEx shipping, Amazon Prime discounts, or Amazon free shipping. To save some cash on goods and services, always ask if there’s a student discount available.
You should also use grocery coupons, as these savings can add up so that you can treat yourself to a fancy dinner or go to a club with friends. Whenever you can, avoid buying fast food since the same amount of money will go a long way if you get fresh produce to cook from scratch. This also means you’ll be enjoying healthier meals in general. It’s also a great idea to buy campus room supplies at a dollar store, as you won’t be needing these items for long.
Be on the lookout for free events that you could check out. Sure, it might not be the nightclub everyone’s talking about, but you’ll save quite a bit. The same goes for classes at community colleges and universities that organize courses you can attend free of charge.
Create an Emergency Fund
Last but not least, you must remember that life is unpredictable, and often these unforeseen events will cost you money. To be prepared, make a special fund for rainy days by taking 10% of your total savings and placing it in this fund.
Switching jobs, covering the dorm rent if your roommate walks out, or taking the car for emergency repairs is something people don’t factor in when creating a budget. A special fund will help you weather those rough times and keep your finances on course.
Use a Budget Planner App
By now, you should have your budget all figured out. If you’re still puzzled by the numbers and can’t make heads or tails of your net income versus your monthly expenses, check out free budget planner apps on Google Play or the App Store. Most of these free apps have an intuitive user interface that will guide you through all the steps. With one of these tools, you’ll have created a systematic monthly budget in no time!
About The Author
Ashley Rosa
Ashley Rosa is a freelance writer and blogger. As writing is her passion that why she loves to write blogs related to the latest trends in technology and sometimes on health-tech as well. She is crazy about food.
