If you are an average college student it will be a fair assumption that you will have to live within rather tight financial restrictions. A lot of this has to do with the fact that you are now far more independent than you used to be and this costs money. There are new friendships and more than a couple of parties to attend. Study takes a lot of your time which means it is not practical to have a full time job.
Your parents have no doubt done a good job to get you this far, and they are quite willing to back you throughout your remaining college years, but the truth is that you will always want more money for something, no matter what you are presently receiving. The answer to your dilemma is budgeting.
Anybody on a fixed, or limited, income must learn how to budget. If you don't learn how to budget your money now you will soon find yourself in a financial bind. The best part about budgeting while young is that it is a discipline that will stay with you for the rest of your life. Those who fail to budget at this early stage will find they will be borrowing to keep themselves out of financial trouble and this is another trait that will likely follow you through life no matter what you finish up earning. The following ideas might help to make it a bit easier for you to set up a budget for yourself and then stick to it.
There are some very good software applications available online that can help you set up an efficient budget if you are sincere in wanting to get your finances in order and keep them there. This type of software is usually free and it gives you a good base to build up from after you graduate. If you prefer, similar apps are available for your smartphone. This means you can take your budget with you where ever you go. All you need do is to record your spending and the software will do the rest for you. You will also be able to obtain reports on where you stand in regard to your spending any time you wish to do so.
Setting Up Your Budget
It doesn't matter whether you are setting up your budget on your computer, smartphone or as a hard-copy, you will need to enter some basic information and you should start with your income. To give you an idea your earnings could come from the following sources:
- Parents’ contributions.
- Student loans.
- Part time work.
Once you know exactly what your monthly earnings are, you have something to work with. Add up all these income streams and place your total monthly earning to the right of the page, or if using software, in the appropriate field.
Your next move will be to find out how much you spend each month. You start off with the most important, costs that have to be paid, no matter what. Such as:
- Accommodation costs. This could be the rent you are paying for your flat or apartment. Your board if you are in a boarding house or for lodgings in a private home.
- Utility costs. Such as gas, water, electricity. Only enter your share of these costs if you are sharing with any other people.
- Food. Only enter the amount of food you buy with your own money each month. Items such as vegetables, meat, milk, bread etc.
- School fees.
- Car loan repayments. If you are paying off a car enter the amount of monthly repayment you have to make.
- Credit card repayments.
- Other loan repayments.
These payments are the most important that you have no choice but to pay each month so they take priority. Your next list is important but not life or death. It may include such things as:
- Tuition costs.
- Public transport. Such as train or bus tickets.
- Parking costs.
- Insurances. Insurance costs for your car, life insurance, health insurance cover etc.
- Clothing and grooming.
Finally you will arrive at your remaining monthly costs that could be ignored if they had to be, if circumstances got that tight:
- Cell phone.
- Home phone.
- Dining out.
Total all of these expenditure items and write this figure on the right hand side of the page. You then take this amount from that of your earnings higher up on the page. With a bit of luck you might have a small surplus. If you don't you will either have some pruning to do, or alternatively, find a way to earn more money.
Decide on a Financial Plan
Now you know where you stand financially it is time to set out a realistic financial plan you can stick to. It is preferable to design your financial goals so that you can save a little each month to cover any emergency that may arise. If you have to cut back on some expenditure to achieve your goals you can start with the last four items you listed.
These being your:
- Cell phone, you may need a cheaper plan or restrict yourself to texting only
- The home phone may be needed for your broadband connection but you could restrict your calls to be made via Skype or some other voip scheme, in which case most of your calls will be free
- Dining out could be restricted to picnics in the park if need be
- Entertainment is also an area where cuts can be made and you would still remain healthy.
Remember that you are young however and that you will need to partake in entertainment and eating out on occasions, so don't be too restrictive. If you are you will soon tire of your budget and begin to avoid sticking to it. This must be avoided at all costs.
It has proven useful to many people to use cash for your food, dining out, entertainment, gas, parking and public transport costs. This money could be placed in envelopes specific for these purposes but if more was needed for one and less for another in any month you could be flexible in this regard and move the money around a bit.
This article was written by Justin Toladro from Life Insurance Finder. Visit our site to compare life insurance and for more information on life insurance policies thats right for you.