Student Budget Plans that Work
Creating a student budget plan is an important step every student can take to assess his or her financial wellness. A college student budget can help you keep track of your expenses, analyze your assets and income and set financial goals for yourself. And whether those goals are short-, medium- or long-term goals, a personal budget plan will help you reach them. Use the steps below to help you create your first student budget plan.
Student Budget Plan Step One: Assess Your Finances
How much money do you have? How much money can you make in college? How much are your parents willing to give you? Do you want to go
green on your student budget? The following exercises should help you
determine how much money you will have each month to live on while in college.
Now's the time to be completely honest with yourself. You may realize that
you'll be more financially comfortable than you thought, or you might discover
that you'll need to get a part-time job to bridge
the gap between budget and expenses while you're in school. Either way
you will have your financial reality staring you in the face. So get out a
pen and paper and get to work!
Determining Your Assets from Income and Savings
Ask yourself the following questions to help determine your current income and savings status:
- How much do you have in a savings account or other bank account that
is readily available for your use?
- Do you have any savings bonds that you can cash?
- How much money do you anticipate saving from high school graduation
gifts or other sources this year?
- How much money after taxes do you anticipate saving from a summer job?
- How much money will your parents contribute to fund your living expenses?
- How much will you earn from work-study or another part-time job?
- Are you covered under your parents' health and dental insurance plans,
or will you have to get your own student insurance, like student car insurance?
Once you've gathered your asset information together, you can determine your monthly budget. To do this, add all of your fixed assets together. Then take your monthly figures and multiply those by the number of months you anticipate earning them. When you add those figures together and then divide by the number of months in your school year you'll get your monthly budget. Confused? Don't be, an easy real-world example follows:
- Say you have $250 in a savings account and just received a total of $500 in graduation gifts. You anticipate making $750 after taxes per month for June, July and August. Multiply the $750 by 3 months and your total is $2,250. Your parents also promised they'd pay you $200 per month for the school year. So multiply $200 by the 10 months of your school year for a total of $2,000. To determine your monthly budget figure you would simply add all of those figures together ($250 + $500 + $2,250 + $2,000 = $5,000) and then divide that total by 10 months ($5,000/10 = $500 per month).
This hypothetical $500 will be your monthly budget during the school year. And that will become your fund for paying all of your expenses.
Determining Your Expenses
Ask yourself the following questions to help determine expected expenses. Be sure to account for roommate contributions where appropriate:
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- How much of your tuition, fees and room & board will you be responsible for?
- If you aren't living on campus, what will your rent be?
- Will you have utility payments for gas, water, electricity and oil?
- Will you have to pay for internet access, cable television, a home phone line, a cell phone?
- What are your transportation costs? Will you be driving to and from school, or taking a bus or train? Is your school in another state thus requiring occasional airline travel? If you have a car, don't forget to factor in student auto loan payments and costs for student insurance, gas, tolls, parking and occasional maintenance.
- Is your meal plan included with room & board or do you have to pay as you go? Will you be grocery shopping and cooking for yourself? Will you occasionally eat out or order in?
- Are you covered under your parents' health and dental insurance plans, or will you have to get your own student insurance?
- Do you have any ongoing prescriptions that you must pay for?
- Will you be attending the theatre, concerts or going to the movies occasionally?
- Will you be taking anyone on an occasional date?
- Will you be purchasing birthday, holiday, wedding or other gifts throughout the year?
- Will you have to buy new clothes for school or for any occasions throughout the year?
- Do you have a gym membership?
- Will you want to purchase CDs or music downloads?
- Do you need a new computer? How much will supplies like ink and paper cost?
- Do you have a pet to care for?
- Do you have a daily coffee or cigarette habit?
Wow. Once you start thinking about all the little details, it's really easy to see where your money goes. But it doesn't have to be as overwhelming as it might feel at this moment. In fact, creating a college student budget can help you feel more stable and it's easy to track your expenses in about a month. Just save your receipts for everything you buy over a month and lump the expenditures into spending categories. You can use what's listed above as a guide, or create your own. Take your time and breathe. The student budget plan you create from this process will make it all worthwhile.
Student Budget Plan Step Two: Set Your Financial Goals
In order for your college student budget to be most effective, you should decide what your financial goals are. If you simply want to get by, you may be able to do that without any penny pinching or sacrifice. But if you plan to hit the beach for spring break, backpack through Europe, study abroad for a semester, or buying used a car, you may need to take a different approach to reach your goals. And you can start by making a list of your short-, medium- and long-term goals:
- Short-term goals change often and may include things such as paying rent and other bills, hitting a new restaurant, seeing a new band in concert or taking a weekend ski trip
- Medium-term goals may include taking a summer road trip with your friends, buying next semester's books, studying abroad next year or financing a new car with a student auto loan
- Long-term goals may be paying off your student loans and private loans, investing in the stock market or saving a down payment for a condo
Once you have your goals in place, you should assign the monetary figure that will allow you to reach them. Then you should look for a bank that offers the right student banking accounts for your needs. You may also want to consider getting a credit card. But before you do anything, you have one more step to take. That's assessing and prioritizing your personal budget plan.
Student Budget Plan Step Three: Assess and Prioritize Your Expenditures
The third step in creating a college student budget is to analyze your assets and expenditures to figure out how you can have it all, or how you will eliminate what's not necessary.
After going through the process of creating a student budget plan or personal budget plan many people realize that they actually don't have enough money to pay for all of their expenditures. To make up the difference many times people ignore their personal financial goals. With a little planning, you can have what you need and save to meet your goals. There are two easy ways to make this a reality.
First of all think about the little things you can cut back on to save dollars here and there. Can you lower the heat by a couple degrees in the winter to save electricity? How about trying instant coffee with flavored creamer to kick a daily coffee expenditure? Or can you switch your cell phone carrier to the one most of your family and friends use to benefit from more in-network calling? See, with a little creative thinking, you can save a bundle over the course of the school year.
The second thing you can do to get make your personal budget plan work for you is to consider eliminating some of the nice-to-have entries that aren't really necessities. While having a car is convenient, do you really need one to survive at school? Can you watch your favorite cable television show in your neighbor's dorm room? How about riding your bike to school instead of paying for a gym membership? Only you can separate your necessities from your nice-to-haves.
The bottom line is that you are in control of your financial health. A student budget will keep you on track and help you realize your goals. If you find your expenses are more than your budget can handle, a student loan or a credit card can help you make up the difference.