Do you ever find yourself wondering why what seems to be enough money to last for the entire semester always runs out before the term ends? The answer to this question is simple: failure to implement a realistic budget.
As a college student, you are expected to responsibly manage your financial aid disbursements so they last until the next round comes in. Unfortunately, the likelihood of this actually happening is slim to none for students who aren’t aware of the importance of budgeting, how to create one, and the positive impact it can have on your long-term financial health.
Why You Need a Budget Each Semester
The word “budget” has a negative connotation because it is often associated with some sort of militant regimen that forces you to save every dime of disposable income. However, it is actually an effective planning tool that permits you to disseminate your income over a specified period of time — if used properly.
Just like a curriculum functions as an academic plan for your collegiate career, a budget is a spending plan that dictates your financial well-being.
How to Implement a Budget
To create a budget, follow these steps:
- Compute your total income for the forthcoming semester. This number should include the total amount of grants, loans, private assistance and employment wages you expect to receive over the duration of the semester.
- Calculate monthly fixed and variable expenses. Common expenses include: rent, utilities, cellphones, dining out, entertainment, transportation, car insurance, health insurance and school expenses. Also, be sure to incorporate a slush fund for miscellaneous expenses. If you find it difficult to calculate these figures, track all expenditures for an entire month prior to moving forward with the spending plan.
- Divide the total income by the number of months in a semester. Allocate this figure to each month in the semester.
- Deduct monthly expenses from monthly income.
- If funds remain after all expenses are subtracted from the monthly income, add a line item to your budget for additional saving. It is essential that you save as much as possible during the semester to cover those periods that you may not have any income.
Consistency Is the Key
Budgeting can be a tough feat to accomplish, but the success rate improves with time and practice. In order to remain motivated about your budget, be sure that you are working toward accomplishing some sort of financial goal. Also, be sure to quickly establish an emergency fund to prevent unexpected occurrences from causing your budget to fail in those turbulent months.
Increase Your Income
If you discover that your expenses exceed your income, there are a few alternatives you should consider to ensure that your spending plan for the semester enables your financial aid disbursement to last.
Start by making cuts to your variable expenses, and focus primarily on those items that are merely wants and not needs. If you like to eat out at a fancy restaurant once a week, eliminate this expense and replace it with a low-cost alternative, such as a student night at the local wing spot.
Also, take a part-time job to provide a little more financial cushion. Federal work study jobs are a great option as they are typically located on campus and are accompanied by a lower level of stress than the average employment opportunity. As a last resort, you can always solicit the financial assistance of your parents to make ends meet.
Following a spending plan each semester and eliminating the use of credit cards and emergency student loans will make your life a lot easier in the years following your collegiate career. Not only will you be equipped to properly manage your income, but you will also adopt responsible spending habits that can shield you from drowning in debt.