Tips on Successful Budgeting While in College
- There are many expenses to consider when going to college, especially if you are paying out of pocket.
- A budget is key to ensuring that your money is used efficiently and effectively.
- Below are tips to help you budget better, spend smarter, and become more financially savvy while in college.
Attending college is an important milestone. While in college it’s a must to establish a great financial mindset. According to a study by Ohio State University, more than 70 percent of college students reported feeling stressed about their finances. So if you’re headed to college or are in college now, here is a list of how to budget responsibly to increase your financial success.
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One key issue many people are susceptible to is overspending. Access to money can be difficult during college, meaning every dollar counts, so it is essential to ensure that no dollar is misspent. As a result, one common way to ensure that your money is spent wisely is by creating a budget.
Creating a budget allows you to overlook your personal finances and ensure you reach your financial goals. A budget can be created in many ways; it can be on paper, a spreadsheet, or a budgeting app. The critical thing to remember is to find a method that works for you and is one you can stick to. Consistent budgeting will allow you to have more money left in your bank account.
Create an Emergency Fund
After creating your monthly budget, you become aware of how much you have left over after paying off your expenses. Once you figure out your disposable income, it is time to set money aside for an emergency fund.
An emergency savings account comprises 3-6 months’ worth of expenses. Adding money to your savings account will help you securely store your hard-earned money while preparing for unexpected financial expenses. In addition, when you have money saved for a rainy day, it will significantly reduce your stress levels. Proper planning and preparation are crucial to creating financial security.
Track Your Income and Expenses
When in college, money can be tight, so it is important to know how much money you have that can be spent. The money that can be tracked as income can be earned from working a part-time job or through financial aid. Regardless of how the money is attained, knowing your income level gives you an idea of your financial position.
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One key issue why many people do not have the money they desire is excessive spending. There is nothing wrong with spending money; however, when it is not in moderation, it can cause financial problems. Therefore, at the end of each month, track your expenses and see how much you are spending.
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After tracking your expenses, divide them into two categories, wants, and needs. Wants are expenses that you do not particularly need but still purchase to enjoy your life. Some common examples of wants are streaming service subscriptions to Netflix, buying clothes from time to time, and dining out with friends.
On the other hand, needs are necessary expenses that must be taken care of at the end of each month. Examples of needs for college students are meal plans, room and board fees, and transportation.
Common Budgeting Mistakes
The key to successful budgeting is to make sure the financial restrictions you put on your money are not too tight. One common mistake people make is they put stringent restrictions on their money, so they save more. Although this tactic helps save money in the short run, it does mean one may struggle with spending enough money to purchase desired items.
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Hence, a person may transfer more money into their checking account to spend more on wants. Thus, these firm boundaries cause long-term harm to your finances. An easy way to fix this is by balancing how much money you save and spend. One of the most common budgeting tactics is the 50/30/20 rule.
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Benefits of Budgeting
A budget is a beneficial financial tool that can help create financial stability, reach your money goals, and build wealth. By starting the habit of budgeting early, you can make your discipline to save money before you head off to college or while in college. In addition, when you start learning money management skills early on, you will be able to navigate your financial future better.
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Also, once you graduate from college, you begin paying off student loans. Having solid financial habits makes paying off your tuition and fees easier. As student loan debt can be very damaging to your credit score if not paid on time, getting used to the mentality of budgeting your money accordingly can help prevent these financial difficulties.
The Money Wrap-Up
Truth be told, the only way you will truly determine the best way for you to better your finances is by trial and error. College is the ideal time to practice numerous budgeting techniques and determine the most suitable one.
Therefore, financial mistakes earlier in life will carry little to no repercussions, ultimately allowing you to mess up and learn along the way. However, if you wait until later in your life to try and improve, it will become more challenging to knock off the old techniques and change your financial habits.
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