Now a senior at Elmhurst College in Elmhurst Illinois, Jessica W. grew up in a well-to-do neighborhood. Her mother, a single parent, earned just enough to provide Jessica and her brother the bare necessities, and taught the two of them how to live simply and within their means.
“I went to school with wealthy friends, but my family didn’t overspend on luxuries, like going out to dinner all the time,” says Jessica. “We learned how to live on little money, and it always surprised people how well we lived.”
Despite the frugal habits of her mother, Jessica was never taught a formal budgeting method. Nonetheless, she has developed her own way of tracking finances through the use of age-old tools: a notebook and a pen.
“I don’t care about shoes and I don’t care about clothes,” says Jessica. “I like to spend my money on things that will keep rewarding me, like my animals.” Indeed, she has twenty-five snakes, two lizards, and a dog. Maintaining a budget has been instrumental in helping her meet the financial demands of caring for all of her animals. She checks her bank account almost daily and writes down all expenses. Reviewing her budget, she has realized that the monthly care for her dog costs more than taking care of all 27 reptiles combined.
Jessica may have some unusual expenses, but her diligent budgeting is a habit worth emulating. Developing and maintaining a budget requires discipline, but once you know where you stand, financial stresses—like running out of money or accumulating debt—can be alleviated.
“A lot of my friends only look at their money from a current standpoint,” says Bryant C., an accounting major at Winston-Salem State University in North Carolina. “They don’t realize that budgeting is an essential tool for planning for the future.” By cutting out unnecessary purchases and putting more money toward savings, you’ll have extra to put toward important short- and long-term goals.
Twenty-one percent of respondents to a recent Student Health 101 survey said they don’t keep a budget, and 35 percent of them said it’s because they are too busy. While there are a plethora of software tools to aid in drafting a budget, you can also successfully create one in an afternoon, using simple tools like a ledger, spreadsheet application, or smartphone app. Here’s how:
Incoming Funds
Outgoing Funds
Next you’ll need to track and list where your income is going.
Bring It All Together
Now, add up your earnings and expenses separately. If you earn more than you spend, pat yourself on the back. But if you spend more than you earn, you’ll need to make some adjustments.
The first area to examine is your discretionary spending. Are there any recurring purchases that aren’t really necessary? Some of the most common items to derail a budget include coffee, tobacco, alcohol, restaurant meals, and technology.
“I tend to buy a lot of electronic items,” says Mitchell W., a freshman at St. Cloud State University in Minnesota. “Some things that I’ve bought were an impulse purchase, and now I’m looking at myself saying ‘Why did I ever buy that? I didn’t need it.’”
If you want to increase the amount of money you have set aside for big purchases or future plans (such as travel), gear your spending habits toward saving 10 percent of your earnings each month. To get on track, make reasonable estimates of how much less you could spend and use these to draft a new budget. Write your lower spending goals down in each category. To ensure that you save, transfer money to a separate savings account and consider it “off limits.”
As Andrew M. at The College of William & Mary in Williamsburg, Virginia suggests, “It’s good to put [bonuses, raises, or monetary gifts from family] into savings or an emergency fund. If you don’t plan on having them, you won’t need them.”
You now have a personal budget!
Just because you are living within a budget does not mean you can’t have fun. Find inexpensive ways to enjoy yourself: second-run movie theaters or half-price matinees, student concerts, and pot-luck meals with friends.
Mitchell W. suggests using coupon Web sites to find discounts on items such as clothes, services, restaurant food, and other discretionary purchases. Plus, most campuses offer plenty of free programs and have discount service arrangements with local businesses. Stop by your campus activities office to find out what’s available. Museums, Amtrak, clothing stores, and many other companies also offer discounts for students with an I.D. Just ask!
If all of this is feeling a bit overwhelming, it can help to remember that budgets are not written in stone. Be realistic when evaluating your spending habits and revise your budget as needed. Keep detailed records of your earnings and expenses, and review your budget every few months to gauge whether your spending and saving goals make sense. With time, sticking with a budget will feel like a healthy habit that helps you do what you need to do while also saving for those things you want.
Nicole talks about taking advantage of work study and on campus jobs during the school year. (MP4, 01:29)
ANTHONY EVERETTE JR. is a sophomore studying journalism and communications at Ashford University online.
If tracking your money with a pen and paper feels a little archaic, there are plenty of free Web-based tools, smartphone and tablet apps, and downloadable software to help you develop and maintain a budget. One of the most popular of these is Mint.com, which gets glowing reviews from both students and professionals. After you sign up for this free service, Mint pulls together information from your bank accounts, credit cards, insurance policies, etc., and automatically organizes your spending into categories. Easy-to-read charts and graphs provide a visual representation of your spending habits, and the Mint mobile app allows you to view details of your budget wherever you are. You can also create savings goals and bill reminders to stay on track.
If you’d rather keep all of your information on your hard drive, programs such as Quicken® may be right for you. There are also downloadable open-source budgeting programs. Like Mint.com, these allow you to allocate your spending in various categories and then view charts and graphs of where your money is going.
