A planning budget for students takes time and thought, but it’s worth it because it helps students stay on top of their financial goals. An important component of maintaining a careful budget is making sure that all expenditures are accounted for.
In order to develop a realistic picture of independent life, students should prepare an estimate of their annual expenses.
This estimate translates to a monthly budget for students to live within their income or allowance.
However, making a budget for students is one of the most important steps one should take. Read on to learn the things that should be included in your budget as a student.
Here is an overview of what to expect:
What is a budget?
A budget is an estimation of revenue and expenses over a specified future period of time and is usually compiled and re-evaluated on a periodic basis. Budgets can be made for a person, a group of people, a business, a government, or just about anything else that makes and spends money.
Why should I create a budget?
A budget is a guide that keeps you on the path to reach your financial goals. Budgeting keeps your finances under control, shows when you need to make adjustments to your spending, and helps you decide where your money goes instead of wondering where it all went.
Here are the reasons you should create a budget:
1. Budgeting helps you achieve academic and financial goals
Writing down your goals is the first step in creating a plan to make them realities. A budget will also help you prepare for unexpected expenses and obstacles.
Budgeting involves challenging decision-making, but setting goals will make the tough choices a little easier.
As you create a budget, you’ll want to set short-, medium-, and long-term goals and track your progress toward achieving them.
2. Budgeting makes it easier to plan, to save, and to control your expenses
When you set up your budget, you’ll be able to see whether your expenses exceed your income and, if so, then you can identify expenses that can be reduced.
Once you’re paying attention to your income and spending, you can make informed decisions that will help you meet your financial goals.
Plus, if you have problems keeping your spending under control, a budget will help you manage your spending. Following a budget can help you free up money for the things that really matter to you.
3. Budgeting can help you avoid debt and improve your credit
When you stick to a budget, you avoid spending more than you earn and you can avoid or reduce your credit card debt.
If you have received student loans to help with the cost of college or career school, then a budget will help you make the most of the money you’ve borrowed and can help you determine how long it will take to repay your debt and how much it will cost.
If you do borrow, being able to pay what you owe on time each month will have a positive impact on your creditworthiness and your financial future.
How do I create a budget?
Creating a budget is pretty straightforward and starts with this simple equation:
What you earn (your income) minus what you spend (your expenses). The steps involved in creating a budget include:
1. Write down your total income for the month
This is your total take-home (after-tax). Don’t forget to include everything—full-time jobs, second jobs, freelance pay, Social Security checks, and any other ongoing sources of income.
2. List all your expenses
Think about your regular bills (mortgage, electricity, etc.) and your irregular bills that are due for the upcoming month.
After that, total your other costs, like food, gas, and entertainment. Every dollar you spend should be accounted for.
3. Subtract expenses from income to equal zero
This is called a zero-based budget, meaning your income minus your expenses should equal zero. If you’re over or under, check your math or simply return to the previous step and try again.
4. Track your expenses
Budgeting is not just a one-time event. You’ll need to track your spending over time and update your budget as needed. .
What are the things that should be in my budget as a student?
1. Housing
Finding a place to stay is one of the most important budgets for students. Undergraduates living in a college dormitory or campus housing often pay less for a room than they would for off-campus apartments or houses.
While students living at home incur commuting and transportation costs, living at your parents’ home for little to no rent saves money.
Your monthly housing costs vary widely according to the region and whether you live with roommates to share expenses.
Students whose parents pay for housing should still be aware of the cost of housing because their living situation may change during the course of their college education.
Remember to consider the cost of heat, electricity, Internet and tenant’s insurance. Living with roommates is a way to reduce all these costs.
2. Utilities
Rent and monthly housing costs should be included in the budget for students, which may include basic utilities such as water and garbage collection.
Tenants pay for additional services, such as Internet service, electricity, cable television, and telephone. Companies such as Comcast, AT&T, and Verizon often bundle these services for a single fee.
Telephone costs can accumulate if you have both a landline and a mobile phone.
The utility company charges for electrical usage each month, which can vary according to season and size of the home.
3. Books and other course materials
Buying books and course materials is one of the basic budget for students. Students usually pay for school expenses such as supplies, equipment, and textbooks at the start of each semester.
Costs for textbooks can add up to several hundred dollars, even if you are buying used books.
Use past receipts or a class supply list to estimate your needs for the upcoming year and calculate how much you need to save each month to cover those costs.
4. Tuition fees
Tuition fees are what you pay your university or college to enroll in your program and attend classes.
Paying tuition fees should be included in the budget for students.
Tuition fees may vary depending on:
Check your school’s website for details about the tuition fees you’ll pay. You will also need to pay other types of student fees such as student union fees and administration fees. The exact fees will depend on your school.
5. Food
Food is one of the important things that should be included in the budget for students. Some colleges include a dining plan with on-campus housing fees.
Students often limit their food choices based on convenience and cost.
Since grocery prices can vary according to the area, prepare your initial budget using the cost for on-campus dining.
As you become familiar with the area, adjust your monthly food costs based on actual expenses.
6. Clothing
It is no doubt that clothing should be included in the budget for students, even the most frugal college student needs a clothing budget to purchase or replace seasonal clothes and shoes.
The clothing budget should also include costs for laundry and cleaning supplies. College dorms and apartment complexes offer a laundry room with coin- or card-operated washers and dryers.
Estimate how many loads of laundry you wash each month, and calculate the cost. Add the cost for laundry detergent and fabric softener to your grocery list.
Allocate a minimal amount, for clothing to cover a new pair of shoes and T-shirts each year.
7. Transportation
Leasing or paying for a car loan involves monthly payments.
Car insurance, parking, gas, repairs, and maintenance such as oil changes aren’t paid once a month, so these charges need to be estimated for the year and included in the budget for students then divided by 12 to include the cost on a monthly budget.
Remember that these costs may not be required every month, so don’t spend the extra money in your bank account.
8. Entertainment
Entertainment and cell phone costs are examples of other expenses you’ll need to consider in the budget for students. To reduce these costs, look for ways to save by focusing on what you need instead of what you want.
You may be able to save money on these costs by using student discount cards.
9. Health
The health and wellbeing of a student are very important, so, health costs should be included in the budget for students. Private health insurance coverage is usually included in student fees.
This insurance covers medical or dental costs not covered by your provincial or territorial health insurance.
If you have private health insurance coverage with your job or family, you may be able to opt-out of your school’s coverage. Check with your school to see if you’re eligible.
Most schools require you to opt-out during the first few weeks of the school year. You may have to provide proof that you have private health insurance coverage from another source.
10. Rising cost
Your tuition and living costs may rise each year that you’re a student. The cost of your books and living expenses may increase due to inflation. Inflation is the rising cost of consumer goods and services.
These increases in cost should be included in the budget for students. You may want to consider making a new budget for each year that you’re a student.
How do I balance a job and school?
When planning a budget for students, consider where the money will come from. Your income may come from personal savings or from working while going to school.
For some students, working while in college is a necessity; for others, it is a way to build a résumé or earn extra money for luxuries. Whatever the reason, it’s important to know the pros and cons of working while you’re attending school.
If you have a job, determine how many hours a week you’ll be able to work and still be able to stay on track with school demands.
For example, if you want to earn more money and potentially reduce your need for student loans (or reduce the amount that you borrow), then you could consider working more hours.
Managing a schedule with limited free time is an excellent way to prepare for your future.
But remember, you may also need to take fewer classes to accommodate your work schedule.
Keep in mind that part-time enrollment will delay your graduation, postpone your ability to earn a higher income, and possibly impact your eligibility for some federal aid. Tuition and fees may also be higher for part-time enrollment.
You may opt to work fewer hours and maximize the benefit of your student loans by taking a heavier class load instead of the minimum requirements. By taking extra classes, you may be able to graduate earlier.
Alternatively, you may find that taking classes during the summer leaves you better able to balance work and school during the academic year and still stay on track to graduate on time.
Keep in mind that the longer it takes to complete your program of study, the more you will pay in total.
To add to your income you can also consider:
What should I know about budgeting after I leave school?
Your expenses will change after you leave school. For example, if you recently graduated, you usually won’t be required to begin paying off your student loans for six months, but when that payment is added to your monthly expenses, it will have a big impact on your budget.
When you leave school, you’ll want to update your budget to include student loan payments, as well as your new income and living costs.
Leaving school can be exciting and stressful at the same time, but you don’t want to stop tracking and managing your finances.
As you move through changes in your life, you’ll need to constantly reevaluate your income and expenses. Your goals will also change as well.
You may want to buy a car, get married, have children, continue your education, or start a business, and all these activities affect your budget in some way.
Think of your budget as a living document. You have the power to revise it at any time to keep track of your finances and reach your goals.
Conclusion
Planning a budget for students helps and prepares students for the unexpected. This article further highlights those things that make up a budget.
A budget is an estimation of revenue and expenses over a specified future period of time and is usually compiled and re-evaluated on a periodic basis. Budgets can be made for a person, a group of people, a business, a government, or just about anything else that makes and spends money.
1. Define Your Financial Goals
2. Do a Financial SWOT Test
3. Create a Money Pipeline
4. Automate Most of the Process
5. Credit Cards
6. Save for Non-Regular Expenses
7. Get Your Spending Habits in Check
8. Plan and Research to Cut Expenses
9. Wrapping Up
1. Write down your total income for the month
2. List all your expenses
3. Subtract expenses from income to equal zero
4. Track all your expenses
1. Housing
2. Utilities
3. Books and other course materials
4. Tuition fees
5. Food
6. Clothing
7. Transportation
8. Entertainment
9. Health
10. Rising cost
1. Budgeting helps you achieve academic and financial goals
2. Budgeting makes it easier to plan, to save, and to control your expenses
3. Budgeting can help you avoid debt and improve your credit
Sources
canada.ca– financial consume agency services budget student life
sapling– typical monthly budget college student
studentaidhelp.ed.gov– answers detail to prepare for college budgeting
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