Why You Need a Budget
What with submitting assignments, completing required internship hours, playing on the intramural sports team and spending late nights with friends, setting aside time to create and maintain a budget may seem like a big ask. According to data collected by EverFi and Higher One, college students’ interest in following a budget, limiting spending and investing income into savings has steadily dropped in recent years. In fact, the number of those who follow budgets dropped by more than 10 percent between 2012 and 2014. While budgeting takes time — a valuable commodity in college — it’s worth it. Students who observe financial spending limits and savings goals early on not only worry less about money, but they also have nest eggs available when graduating and starting out in their adult lives.
The best piece of advice for figuring out the components of a budget is to keep it simple. While many adults use an annual budget system, students often find it easier to work from a semester model. Whether you receive money from a parent/guardian or have a job, consider how much money you typically receive during a semester. Divide that amount by the length of your semester to get a sense of how much money you can spend each month.
According to financial behaviorist Syble Solomon, many students run into budget issues when they begin making decisions based on emotions in the moment. “Students need to think through the ‘what if’ questions and be prepared for situations when they will spend money without thinking,” she says. “What if your friends are going to a concert where tickets cost $100 and you hadn’t planned on that expense? What if your friends are planning an amazing spring break that is way more than you planned to spend? By being aware that things like this will pop up from time to time, you can be better prepared and not throw your budget out of order.”
Some expenses are fixed, while others fluctuate from month to month. By setting a budget for things like eating out, clothes and travel, students avoid running out of money before the semester ends and can save for things like spring fall break or any emergency expenses.
The next step is to find a website or app to manage your budget. Many free tools exist that automatically import debit/credit card statements and categorize them into various types of expenses. By tracking this information, students gain a sense of where they need to cut back and places where they can save money.
Determining what your expenses will be is a valuable step for any budget, and students are likely to have several fixed and variable expenses each month. When creating a budget, it’s important to consider which (if any) expenses are covered by a parent or guardian and subtract those from your monthly expenses. Following are common expenses students may expect to be responsible for: