College is an exciting time, filled with opportunity and growth. However, the college years often pose financial challenges as well. Some students struggle to make ends meet when faced with the adult responsibility of managing their own money. College is also a time when many young adults begin to accumulate debt that can take years, even decades, to pay off. Learning to budget is a valuable skill that you can learn to develop while in college. The benefits of this skill last a lifetime.
If you want to successfully set and maintain a budget, you have to be forward thinking. An undergraduate program usually lasts 4 to 5 years. Consider where you want to be 1 year, 5 years and 10 years down the road. If you want to own a home within the next 10 years, for instance, you most likely will need to have money saved for a down payment. This might require that you save several thousand dollars, which means that you will have to budget frugally enough to accommodate a savings plan. Write your goals as specifically as possible and refer to them often. This will help to keep you motivated during the college years.
The next step to budgeting is figuring out how much you spend over the course of an average week or month. Keep track of everything you spend, from small to large purchases. Once you've gathered data for a few weeks, begin to categorize your expenses. Common categories during college include tuition, books, rent, food, utilities, phone, entertainment and automotive expenses.
Once you've determined how you're spending your money, it's time to analyze your cash flow. Look at your monthly income and compare it to your monthly expenses. Obviously, if you're spending more than you make, you are setting yourself up for debt. Weed out unnecessary expenses. Cut corners if necessary. Common ways of reducing your expenses include choosing free entertainment options, cooking for yourself rather than eating out, renting books instead of buying them and choosing a cheaper phone plan. Separating your wants from your needs will help you to plan your budget efficiently. Create dollar amounts for each expense category that will help you to stay within the range of your income.
Maintaining Your Plan
Creating a budget won't help you if you don't maintain it consistently over time. This means that you will continue to monitor your spending habits and compare them to your set allowances for each type of expense. If you have unexpected expenses one month, you may have to cut back in another area. If you get a raise, you may be able to spend a little more on wants instead of needs, or you might want to start a savings account. Keep your goals in mind and refer to your plan to keep yourself on track as you implement your budget on a monthly basis.
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