College tuition is soaring to all-time highs and the monthly expenses of college students are high as well. Sure, you can skrimp and cut corners, living on nothing but ramen and cheap coffee, but there are better options. With a little money management and a part-time job, you can likely maintain a comfortable lifestyle.Here are some tried and true tips for creating a budget to help you fully enjoy some of the best years of your life:
Get an Accurate Picture of Your Income & Expenses
Your first crucial step is to realistically assess the amount of money you have. If you’ve never made yourself a budget before, you may be surprised to see exactly how your monthly spending breaks down. To begin, review your monthly bank statements for all of your accounts. Categorize every purchase and then tally up how much you spend each month in every category. This helps you see if you’re spending too much on eating out or on buying clothes. Next, add up the money you bring in every month, whether you earn it at a job or your parents help you by giving you a monthly allowance. If your spending money comes from a student loan, divide the total amount by the number of months per semester. To better manage a lump sum like this, deposit it into a savings account and set up an automatic transfer for the monthly amount determined above. If your income comes from a job that relies heavily on tips, like waiting tables, valet parking or bartending, you need to make a conservative guess of your average monthly earnings. When guessing income, always estimate low so any income over what you’ve budgeted acts like a bonus.
Create a Plan
Figure out what the maximum amount you can spend is for each category of your expenses. For expenses that vary month to month, estimate high to allow for a buffer and avoid overtaxing your budgets during the more expensive months. One common guiding principle for budgeting is the 50/20/30 rule. Expense categories are grouped into three main categories: fixed costs (50 percent), financial goals (20 percent) and flexible spending (30 percent). Fixed costs include your housing costs, utilities, car payments, insurance premiums, gym memberships and subscriptions for things like Netflix and Hulu. Financial goals include paying down credit card debt, saving for an emergency fund or saving up for a spring break vacation. Flexible spending includes expenses that vary from month to month, like gas, entertainment, eating out, travel and groceries. Once you have a monthly amount for each of the three categories, you can further break down your expenses into more specific categories. Just make sure that they don’t exceed the percentage limit of the broad category.
Use an app like Mint or an online banking option like Simple to keep track of your finances on the go. Keep your mobile technology up to date so you can take advantage of all of the latest security benefits that are built in. For instance, the new iPhone 7 Plus has Touch ID and Apple Pay that make it even easier and more secure to make purchases online and offline. Just make sure that you’re being smart with what you store online and follow best practices. Change your passwords often and don’t give personal information away to nonsecure sites. You don’t have to use your parents’ old envelope method to stick to a budget. Now there are an assortment of digital options to keep track of your finances and incentives to stay on track.