It’s one thing to talk about budgeting—and another to master the life skill of money management. If you’re living on your own for the first time in college, budgeting basics is one life course you don’t want to fail so badly that it takes years to recover. Here are 10 best budget planning tips to make money management easier for you.
- Know your cash flow. If you don’t have regular monthly income, it may make sense to build your budget around the academic semester—for example, when you have refunds from financial aid, income saved from a summer job, or a chunk to access from savings.
- Identify your spending categories and current amounts. Use your bank or credit union app to look at your expenses over the past months. Start with what you know your needs are (e.g., housing, transportation, food, etc.) versus your wants (e.g., eating out, concerts, spring break trip, etc.).
- Be willing to rethink all your budget categories. Are on-campus housing expenses way out of whack with what you can afford? Look into becoming a resident assistant to get free housing. Is parking and insurance outrageous? Ditch your car (plus gas, registration, and maintenance costs) and instead bike or take the bus.
- Use online apps to reflect on your spending. Let’s face it: if it’s not easy to compare your actual expenses to your goals, you won’t do it. Use apps like Mint or whatever makes it easy for you to look back and see where you overspent and where you did well.
- Minimize borrowing. Take the least amount of loans you can and only borrow for school-related expenses—not pizzas, vacations, or extras. Get a job to pay for these if you really want them, rather than borrowing for them. And, if you come into extra money, consider putting it toward loan payments (such as interest-only loans) while you’re in school so you can save on long-term interest.
- Go easy on using credit. If you want to establish credit with a credit card, don’t have more than one. Choose one card with good rates and terms, and pay off the entire balance monthly. Consider using it just to pay for one type of required expense each month (for example, gas) so you won’t be tempted to use it to overextend.
- Look for student discounts. More places than you realize offer student discounts, and you might as well take advantage of them while you can. It will get you in the practice of knowing how to shop for deals, too. The extra savings can help when unexpected expenses arise that you didn’t plan for in your budget.
- Separate money into fixed vs. variable expenses. When you’re getting started, consider having two bank accounts—one for tuition, rent, car insurance, and other fixed expenses, and the other for variable expenses. When you need money for a night out, just take cash or a debit card tied to the variable expense account so you can’t deplete money you need for must-pay bills.
- Think green. Make your own coffee rather than hitting coffee shops. Recycle your used textbooks, or—better yet, download ebooks. Use your computer to take notes rather than lugging around notebooks and other supplies. With these smart choices, you’ll save money, the environment—heck, even your back.
- Think long-term. Learn to develop patience. Life’s a journey, and you’re just at the beginning. If you can live within your means with the help of a budget, and make smart choices, you’ll be able to save for things you want and enjoy them without the stress of being overextended. It will pay off later. (It will.)
Most people need to borrow to help pay for college, but learning to budget can help you reduce the amount you need to borrow. U-fi is here to help you learn more, and get started with loans to help you pay for college.