Adjusting to college life is filled with obstacles, but basic financial management is one of the biggest challenges students must overcome to be successful not just in college, but in life. Unless you are living on trust fund, the costs of student life can be overwhelming. However, adopting simple money management habits like smart budgeting and spending can make all the difference in the world.
In order to form a strong foundation for money management, there are two essential steps students need to master:
#1- Know where your money is going.
#2- Create and follow a realistic budget.
Mastering these two steps will take time and patience. But the payoff in the long run is freedom from financial stress, dept and the means to provide for yourself and others.
#1 Know Where Your Money is Going
If you don’t already do this, get into the habit TODAY of keeping a spending log. Knowing where your money is going will allow to to take control of your finances and give you the ability to buy the things you really want in the future. A spending log is a very simple but powerful tool to get started. Click here to learn more and to download a spending log you can begin using today.
#2 Create and follow a realistic budget
Following a budget will ensure that you have enough to provide what you need and allow you to reach goals like saving enough money for Spring Break, buying a new bike etc. For this to be successful, it may take months of practice and patience and a willingness to make sacrifices.
To create a budget you can actually follow, review your spending log to see where your money is currently going and where you can cut back. To do this, you must determine between what you need (food, clothing, rent, gas, textbooks) and what you want (the other stuff). Here’s a great tip from the article, 10 budget tips for college students.
You must learn to balance between needs and wants. Your needs will always come first, and your wants second. You have to live within your means, so if your wants exceed your needs, you must either get another job, or sacrifice those wants. Itâ€™s a tough thing, but you can do it! Itâ€™s only for a little while. List monthly income sources, including savings, wages and parental allowances, and then write down estimated expenses for the month. It isn’t easy to identify college living expenses in advance, but you should try. Take costs such as school supplies, food outside your meal plan, personal care items and laundry into account. Then, try managing your budget and tracking expenses using an online personal finance management tool like Mint.com, which helps you easily create and stick to a budget.
Click here for a simple budget worksheet to help get you started. You can also learn more about personal budgeting, visit StudentAid.gov/Budget.
We recommend The Live Like a Duck program for students. This money management program provides tools and tips to help students and their families make sound financial decisions while you attend the UO.
photo credit: $23 lunch/beer/dessert 2009-11-02 12.05.49 via photopin (license)