Spending what you have on what you need.
Whether you have a part-time or full-time job, or are mainly using financial aid to cover your expenses, you need to know how much money is coming each month (or semester), what expenses need to be paid, and when expenses need to be paid.
- Start your financial aid paperwork early so that you have an idea of what your financial aid package will look like before school starts
- Know what your fixed costs (amounts that are the same each month and do not vary much, such as tuition, rent, phone bill, car insurance, etc.) are and when the payments are due
- Subtract your fixed costs from your total income and total financial aid coming in
- Any disposable income or financial aid can be used for costs that may be unexpected, such as car maintenance, medical copays, or personal expenses
If you are using student loans to pay for your costs, it may be easy to forget about a budget with the amount of loan money coming in. However, loans are not free. A loan is a debt that will need to be repaid.
Everyone has heard people say "live like a student" and this is true. Why live like a king on a student budget? This will only cause more issues for you later on. Know what your wants and needs are with the following examples:
- Do you really need a new iPhone 12 Pro when your iPhone 10 works just fine?
- Do you really need to get takeout food every other night, or can you learn how to cook simple meals at home? It is cheaper to have a week's worth of groceries at home than buying food up to 3 times per day.
- For textbooks, do you need a brand new book, or can you rent the book for a small fee?
After some time, you have a good idea of how much money you are spending and where you are spending your money. This will give you the chance to reallocate your money to different costs as your costs may vary each month, with you spending more on costs in one month and spending less in another month.
At the end of the day, creating a budget will give you control over your money and help keep your finances in order. A budget will also help you not to spend more than what you have, and will allow you to plan for both short and long-term expenses.