Creating a Budget as a University Student and How to Save Money
Going off to college is usually the first chance anyone gets at a taste of freedom, but with that freedom comes certain responsibilities such as budgeting. For the uninitiated, having financial responsibilities can be overwhelming especially if one isn’t financially literate – which is a shame because we aren’t taught to manage our finances in school and have to learn when we first gain independence.
Budgeting is highly important to college students because tuition is expensive and many have student loans to consider on top of their living expenses.
- Create an overview of your expenses
- The first step to creating a budget
- Taking your budget into your own hands
- The low down of cutting down on costs
- Your budget should grow with you
Create an overview of your expenses
Think about your college tuition and how it’s being managed. Are your parents’ covering parts of the costs or are you bearing the entire weight of the tuition yourself? If it falls on you to take care of it, you can also consider whether you are taking a loan, or applying for financial aid. Once you understand how often you need to make repayments or how much money you need to set aside each semester, you can move on to deciding how much budget to put aside for food, rent, and other expenses such as books or electronics, transportations, and entertainment.
The first step to creating a budget
As mentioned above, it might be daunting to create a budget for the first time, but the key is to start somewhere'. Over time, your budgeting skills will improve and you can tighten or loosen it in accordance to your level of comfort.
The most common way to construct a budget is by using the 50/30/20 rule where'by you will put 50% of your income towards fixed expenses such as rent, tuition, bills, and groceries. 30% of your monthly income can be used for leisure and self-improvement, such as travel, fitness and health, and the like. Finally, the remaining 20% will be set aside for either your savings or debt repayments.
If you have any money left over from your allocation, you will keep that for emergency uses, such as fluctuating expenses or unexpected costs.
Taking your budget into your own hands
There are so many different budgeting apps and tools that help with tracking and managing one’s budget. Since each interface, features, and even design are different, you can try out a few to see which one fits you best.
You can also track your budget manually by using a spreadsheet or even keeping a physical account, but it can be easy to overlook this task (which should be done daily) and you might miss certain expenditures. Since we have smartphones with comprehensive and easy-to-use apps, it can be easier to just pull it out every time you make a transaction and make a record instead of waiting till you get home.
If you don’t have a fixed income, you’ll want to take that into account as well. Therefore, you should be recording both income and expenses. Cash gifts or any inconsistent streams of revenue should not be depended on to offset fixed expenses, which means that if your family decide to gift you some money for a special occasion, that money will go into your emergency fund instead of being part of the 50/30/20 system.
Bear in mind that expenditure can and often will fluctuate as well due to celebrations such as birthdays, where'by you might want to splurge, but if you’re on a strict budget and don’t have the funds to get a nice gift for your friends and family. There are many ways in which you can make your budget work and it may come with some sacrifices especially if you can’t fit your income into the 50/30/20 system. Tweaks may be necessary and there will be times when you have to think on your feet and get creative to keep costs and extra expenses low.
The low down of cutting down on costs
We all have certain expectations when it comes to our lifestyle. Some people don’t mind scraping by with cup noodles on a daily basis, while others simply cannot go a day without their daily Starbucks or doing their hair every three months. Think about what you absolutely cannot live without, and make a list of things that you don’t necessarily need in order to stay happy. Some people can sacrifice gadgets for quality food, while others don’t mind going hungry as long as they can have their designer goods. Figure out the kind of person you are and reconstruct your budget in accordance to your needs, but here are a few common tips that students are able to cut costs:
1. You don’t need to buy brand new textbooks
Some students even borrow textbooks from university libraries or source for secondhand books from the university bookstore. Since you rarely need your textbook after the semester is over, it stands to reason that you only need it for a small amount of time and therefore do not need it to be brand new, and when you’re done with them, you can resell them so you get back some funds.
2. Living arrangements can make or break your budget
In a study done by Trulia, it was concluded that living off-campus is much cheaper than living in the dorms, but it is still subject to where' your university is located. If you’re studying in a small town, it would be easy for you to find a house-share option to offset costs, but in dense cities like New York, campuses are generally much cheaper, so you want to do your due diligence and compare housing rates before committing. Alternatively, you could stay on campus for one semester and look for a cheaper option when you’re in the area if you do not already stay nearby and can readily look at properties.
3. Cut off anything you don’t need
You don’t really need cable TV or the latest phone on the market in order to complete your college degree. When picking utilities, don’t just go for what you think is the best value for money, because do you really need the best internet plan on the market, or would a cheaper and smaller plan suit your needs better? Don’t forget that all these expenses can really add up so you should only buy what you need, even if it doesn’t offer the best value.
4. Learn how to cook and plan your meals
Thanks to the pandemic, takeout is much more convenient and we have a lot more variety to choose from, but it can get expensive. Cooking for yourself is a lot cheaper than buying meals from a restaurant, and it can be much healthier, to boot. Just make sure that you aren’t spending your money on junk food and actually invest in nutritious whole foods that can provide the sustenance that you need.
5. Prioritize your debts
Spend money to cut costs. When you pay off your credit card bills and loans, you’re reducing the amount of interest that you will eventually pay, which saves you money in the long run. Always try to pay off as much debt as you can, and don’t just resort to focusing on reaching the minimum payments because the interest can quickly add up and become a financial burden. Before you use your money on entertainment or other frivolous things, ask yourself this: Would you rather enjoy today and suffer for a longer period of time, and suffer for the time being and be free from debts much sooner?
Your budget should grow with you
Don’t be too hard on yourself if you find that you can’t stick to your budget 100% in the beginning. Cultivating habits take time and sustainable change comes slowly. Also, don’t just create a budget and expect that it’s the only budget you’ll ever need. Expenses come and go, and sometimes they overlap. Stay flexible and rework your budget any time a new expense or income crops up and you’ll never find yourself panicking about your finances.