Quick And Easy Tips For Budgeting As A StudentMarch 28th 2022
Budgeting as a student doesn’t have to be overwhelming. Too many of us complicate personal finances, making them more difficult than they need to be.
In today’s day and age, it’s easier than ever to budget, especially if you use technology. The key is knowing where you stand, what you must change, and how to set financial goals.
Here are the top 7 ways to make budgeting as a student easy.
Set Financial Goals
A large part of any budget should be financial goals. Even if your goals seem ‘lofty’ or hard to achieve, make them a part of your financial plan.
When you set your sights on something, you’ll plan to achieve them. Let’s say you need to save $10,000 for housing for the next couple of years. Looking at $10,000 seems overwhelming, but if you break that down over 36 months, you only have to save $277 a month. That’s a lot easier to achieve.
Write out your financial goals, the timelines, and what it will take to achieve them.
Save an Emergency Fund
Whether you’re 21 or 52-years old, you need an emergency fund. Consider it a ‘cushion’ should something happen.
An emergency fund is only to cover expenses when you experience a true emergency such as a job loss, landing in the hospital, or something else that drastically affects your income. It’s not a fund to cover you when you spend too much shopping or to buy something outside of your budget.
An emergency fund should have 3 – 6 months of expenses in it and be kept in an account separate from the account you typically spend.
Pay Student Loans Now
One of the best tips for budgeting as a student is to start making student loan payments now, even when you are in school.
It’s so tempting to not pay them because payments aren’t required, but this just makes interest accrue and makes it harder to get out of debt. When you make it a regular part of your budget to pay your student loans, it becomes second nature, and you’ll always be in the habit of paying more than necessary to get yourself out of debt faster.
Pay your Credit Card Balances in Full
Think of your credit cards as cash, not as an extension of your income. If you can’t pay for something in cash, they don’t belong on your credit card either. You should only use a credit card when you’re making a large purchase that you may need to protect with an extended warranty, or you are eligible for cashback rewards.
But, if you can’t pay your credit card balances in full each month, you shouldn’t use them. Once interest accrues, it makes it much harder to get out of debt, and you could get caught in ‘the making only the minimum payment trap’.
Revisit your Budget Often
Too many of us set a budget and then forget about it. But a budget isn’t a one-size-fits-all approach. As your finances change, so should your budget.
Budgeting as a student involves a lot of moving pieces. For example, you probably don’t live in the same place each year, so your expenses change. As your expenses change, so should your budget. Do you need to reallocate funds in different categories to make it all work?
Are you still able to save as much as you were before, or should you cut back elsewhere to make it work?
Prioritize Wants and Needs
It’s easy to think of everything in our lives as a ‘need,’ but be honest with yourself. Write down the items you think you ‘need’ and truly think if it’s something you can’t live without or if it’s something that would be ‘nice to have.’
Prioritize the needs or things you need to live. For example, food, water, clothing, a home, and medical care are all needs. But there’s a fine line there. Clothing to keep you warm and clothed every day is a need, but designer clothes or excessive wardrobes aren’t a need.
Anything that is a ‘want’, work into your budget as you can. Don’t prioritize it over other bills or expenses that are necessary to live, though, and never put wants over saving for the future.
Keep Track of your Expenses
This is where technology helps. You must track your spending. If you spend cash, record it in your budget. If you use a debit or credit card mostly, link it to your budgeting app and let it track your spending for you automatically.
The key is to use an app that you’ll use regularly. There are many free options like Mint or PocketGuard. You can also sign up for paid budgeting apps if you want more features or the ability to automatically record your income and expenses without you doing anything.
This makes it easy to get a bird’s eye view of how you’re doing and what may need to change. You don’t have to spend a lot of time to see when you go over budget and where you overspent. Make the changes and see how you do the next time.
Budgeting as a student isn’t as hard as it seems. With a few simple steps, you can keep yourself on track. The key is to differentiate between your wants and needs, know your income, and categorize your expenses.
Stick to your budget and make sure you include financial goals in your budget, so you’re always planning for the future. Only focusing on today could make your future finances more difficult. Instead, plan for the worst (emergency fund) and hope for the best! This way, you get the best of both worlds – you can enjoy today and know that your future is protected too.
Credit cards aren’t as bad as most people think, and for students, they are often the path to future credit. Most students have many choices for credit cards, even if they’ve never had one before. Using a credit card the right way can be the best way to build credit.
Starting an entrepreneurship is exciting and overwhelming at the same time. But to make it work, you must know the most important ways to make it financially when starting your business. Even one mistake can take your ‘next best thing’ to the biggest flop. Here’s what you must know.
The cover letter is a crucial tool in a professional's job-seeking arsenal, and for younger workers especially, it represents more than an indication of your ability or desire to do a job - it’s where you get to tell your story about who you are and where you want to be.