With college comes a lot of freedom, and also a lot of responsibility. This is most likely the first time you’ll be in charge of your finances. It seems simple: make money, pay bills, buy food. The reality is that poor spending can quickly become a terrible habit which leaves you with more month than money. Here are six tips for creating a spending plan for college.
Decide on a System
You’ll need to figure out a way to track and organize all of your spending and financial records so that all of you information is in one place and easily accessible. There is no one size fits all system, and there are many systems out there. Finding the one that works best for you is what’s important.
Involve your Family
If possible, involve your family in the budget planning process. They’ll likely have some experience in managing a budget and can offer tips and tricks that helped them make the most of their money. You can also determine if any income or assistance will be available from family sources.
Make Financial Aid Last
Luckily for Pell Grant recipients your aid is disbursed once a month, like a paycheck, which makes stretching your aid through the whole semester that much easier. Make it a point to create a schedule for any other financial aid you’ll receive, so that you can plan for how it will be spent and when. Making those funds last can really help if a job falls through or you lose any financial assistance you were receiving from family.
Record all Expenses
This is really important, as it will allow you to see exactly where your money is going. Write down every expense, no matter how big or small. Pay attention at the end of each month to where you spent your money, and use that to determine where you should be spending less and what you can afford to spend more on. Maybe you’re eating fast food every day for lunch, when you could be saving money by making food at home. Recording your expenses allows you to see that, and make adjustments wherever necessary.
Expect the Unexpected
Anything can happen, and it probably will. It’s so important to set a savings goal and build an emergency fund. Start small with a goal of always having a total $500 in your emergency fund. Once you reach that goal, however long it takes, make it a point to maintain that amount and then increase your goal by $100. Increasing your goal, and keeping that minimum amount in your account or cash fund allows you to cover emergency situations without taking away from your regular monthly expenses. This is huge when it comes to having to choose between paying rent or fixing your car. Having an emergency fund allows you to do both, without having to worry about not eating for the rest of the month.
Do your Research
I cannot stress the importance of doing research and shopping around before making a big purchase. There is nothing worse than buying a computer at once place, just to realize you could have paid $150 less somewhere else. This goes for small purchases too. Always make sure you find the best deal and value when buying anything. This will save you money and you’ll feel better about your purchases.
So there you have it: Six tips to creating a spending plan for college. The easy part is done. Now you have to stick to it. Good luck! I know you can do it.