Budgeting

We often think of budgeting as restricting and oftentimes consuming. But budgeting can be made very simple, and the best time to start good budgeting habits is college. By following the few steps below you will be on your way toward building a solid foundation for financial success.

Step #1: Know your income

Since budgeting is all about making a plan on how to spend your income, you first need to know your monthly income amount. Income can include your paycheck, financial aid, and family contributions.

Step #2: Understand needs vs. wants

Needs are required expenses like bills for essentials, the items that you “must have” each month (Remember, you should always budget for your needs first and save for your wants after.)

Wants are something you would like to purchase after you have paid for your needs. They are a comfort or luxury item.

Step #3: Review your spending habits

Go back to previous months and look at what you spent money on. You should ask yourself the following questions:

  • Do my needs exceed 50% of my income?
  • Are my wants too high?
  • Am I eating out too often?
  • Did I try to find the lowest prices for my purchases?
When students start to track their spending, they often need to cut down on their monthly expenses. 
  • Reducing food expenses:
    • Shop once a week
    • Make a list and only buy what you have listed
    • Compare prices
    • Shop the store brand items
  • Eat out less frequently
    • Treat eating out as a luxury
    • Use restaurant coupons or student discounts
    • Split or share meals with a friend
  • Find free or inexpensive entertainment
    • Participate in the Rec Center leagues
    • Check out local museums and parks
    • Seek out discount tickets to events
    • Check out on campus clubs and events

Step #4: Create spending and savings goals

You decide how to spend your income. Try using an income guide to determine your spending goals. The 50x30x20 is common: 50% of income goes towards needs, 30% towards wants, and 20% towards savings.

Based on your status as a student, your income goals might be different while attending school. Yours may look like 80% towards needs, 20% towards wants, and 0% towards savings. When you graduate, however, it’s important to keep track of where your monthly income is going.

Try creating short term spending and savings goals:

  • “I’m going to save $50 this month”
  • “I’m only going to eat out twice this week”
  • “I will make coffee at home this week, instead of buying coffee on campus”

Step #5: Start tracking your current spending

Once you know your income,  needs vs. wants, and your spending trends, you can start to make changes to monitor your future spending. The Money Management website has a Monthly Budget Sheet and a starter Budget Excel Template you can use to get started.

If you need help creating a spending plan that works with your student budget schedule, request an appointment, and we would be happy to help!