Unless you are a person with unlimited financial means, you need to live on a budget. This is especially true while you are a student. Budgeting keeps your finances under control, shows you where to make adjustments, lets you track your expenses, and helps you allocate your money properly.
Why Create a Budget?
Creating a budget lets you see where you spend your money and whether you are keeping to it. This allows you to see where you need to limit your spending on items that you don’t need. Not living beyond your means can help you avoid student debt and maintaining good credit. In a nutshell, budgeting aids you in tackling these common money questions:
- Where am I spending my money?
- Can I spend less?
- Can I pay for unexpected expenses?
- How can I save money for additional expenses?
Set Budgeting Goals
Like other aspects of your life, setting goals is a good way to keep you accountable. Setting budgeting goals helps you plan for expenses by setting aside a certain amount in order to attain those goals. You may want to divide your budget plan into three types of goals: short, medium, and long-term:
- Short-term: Financial goals within the couple of months, like school materials, a weekend trip with friends, or the next phone bill.
- Medium-term: Goals within the next couple of years, such as a new computer, building an emergency fund, or saving for a car down payment.
- Long-term: Goals beyond the next couple of years, including paying off student loans, buying a house, or saving for retirement.
Tips for Creating a Budget
You need to know how much you make and what your expenses are each month and updating your budget plan whenever you experience a change in income or expense. The key to a successful student budget is to stay on track. 1
To help stay on track, you should review your budget at least on a monthly basis. Regularly reviewing your budget may prevent you from getting blindsided by unexpected expenses. Another way to keep your budget on track is to identify the difference between needs and wants. Be mindful of your spending. 2
Creating a budget early in your vocational training will most likely pay off in the future. Whether it’s tuition, rent, car payments, or social activities, careful budgeting can assist you with completing your training in time on limited financial means. Staying on track with your finances as a student will teach you how to manage your finances responsibly well beyond school.
1 – https://studentaid.ed.gov/sa/prepare-for-college/budgeting
2 – http://www.foxbusiness.com/features/2012/10/01/six-college-budget-busters-every-student-should-avoid.html