How to Budget
When students head off to college for the first time, they will may find themselves managing their own money for the first time. If they can learn how to make and follow a budget right away, they will put themselves in good stead for the rest of their lives.
Creating a budget is a simple process, it’s sticking to it that will require will power. The ability to keep in mind any financial goals, such as buying a car or spending a summer studying abroad or having money for graduate school, whenever they are tempted to overspend can be a great motivator.
As with much of life, the first part of the process is research. Understanding how much money is spent each month and how it is spent is the first step. This includes rent, tuition payments, transportation costs, food, and any debt payments. The budget should also include items for entertainment, hobbies, and social activities.
Next up is to calculate the estimated monthly income, whatever the source. Some students work while in school and others receive stipends or family allowances. Be sure to only include regular income and not things like expected birthday presents or hitting someone up for a loan.
There should also be a category for savings or other investments. This should be a regular amount and, if possible, should be taken out of the income before any other expenses. This is where the long-term financial goals come into play.
The real work of the budget comes in making the expenses total less than the income. This can take several passes of adjusting different categories to make the numbers work. If possible, there should be an excess of income, so that more money can be put into savings for emergencies as well as for achieving financial goals.