To many college students, budgeting seems like an extremely daunting task... Who needs to budget anyway with those deferred student loans, am I right? However, keeping a budget and tracking your spending not only keeps you conscious of where all your money is going, but it also allows you to be a more prudent spender. Keeping a budget may even help to minimize the huge ball and chain that we call student debt at the end of your four years.
While there are many ways to start a budget, it can be as simple as using a pen and paper to track your spending. But all budgets should consist of making a bunch of categories (such as food, rent, fun, tuition) and putting down where your money was spent that month. This is made extremely easy by using your credit card or bank statements to track where you spent. You can also track what income you’ve had during that time period, such as parents helping, a job, or grants/loans.
There are many more automated ways to keep track of budgets that I’ve used personally, like the app Mint from Intuit, the maker of TurboTax, or the app Personal Capital. These tools link up to your bank accounts and credit cards and read the data on what money you’ve taken in and the money that has gone out. They allow you to keep track of your spending, and also makes things nice by automatically categorizing most purchases, so you can see how much you spent and where at the end of the week. They even provide nice graphs and sum up all of your incomes and expenditures. With this new information at hand, you can really start to reign in where you’re spending your money, and if it’s even necessary. You can then set yourself some guidelines for how much money you want to spend on these each month, and see your bank account grow, or in my case, shrink less quickly! Budgeting allows you to have financial discipline and understand where you are and what you can afford.
Over time, you’ll start to see trends and averages of where you spend money. It’s quite an eye-opening experience when you start looking. From there you can get insight into what your money says you value, and you can tweak and optimize things like food spending. Budgeting is also one of the reasons I found out that having a dorm with a meal plan was less efficient for me than getting an apartment and cooking food myself. With a budget, you too can learn how to make the most of your money, and keep yourself on a path for financial wellbeing.
Related resource: Making it on a College Budget
Written by Matthew Williams, Financial Wellness for College Students Peer Educator, University of Illinois Extension, Fall 2019. Reviewed by Kathy Sweedler, University of Illinois Extension.