A first year college student has many new challenges to embrace. Living alone for the first time, learning how to motivate themselves to study and go to class, even learning how to do laundry. As a college student, one of the biggest challenges faced today is learning how to effectively manage money. Although exciting, learning to live without the constant support of parents will prove to be particularly difficult for most teenagers and young adults.
That is why building a monthly budget is an important skill to learn. Not only will it help to manage finances throughout the college years, but it is an essential skill that will be needed throughout life. And a budget, done properly, will have lasting benefits.
Good financial habits don’t start after college; they begin now! To help start the process, the financial educators at Money Management International offer the following helpful advice:
Create a Budget: A budget is the most fundamental and most effective financial management tool available. A monthly budget determines the money that is accessible and where that money is going. By distinguishing between the things we “need” and the things we “want” we are able to identify exactly what we are spending our money on. The basics of budgeting are the same for college students as they are for anyone else.
Create a Personal Budget: First tally your sources of income including wage earnings, scholarships, grants, loans, family contributions, and available savings. Next, document your spending including fixed, variable, and periodic expenses and build a budget with help from an online expense worksheet.
Set Financial Goals: By setting a S.M.A.R.T financial goals that are specific, measurable, achievable, rewarding and timely, whether it is short-term or long-term, you are able to determine how your spending decisions affect your progress toward your financial goals.
Open a Savings Account: You will need savings, not only for emergencies, but for the unexpected expenses you know will come up, such as the last minute extra book your college professor will assign or repairs for your car that’s out of warranty. Being prepared with savings will keep a minor financial setback from becoming a financial emergency.
Keep track of spending: Often, it is the little everyday purchases that make the biggest impact on your budget. It’s important to track your expenses and look for ways to “cut costs.”