Former financial aid counselor Ken O' Connor points out on the CU Student Loans website that while students can take classes in such diverse subjects as medieval poetry, most colleges don't offer students courses in basic budgeting. Despite this, learning to budget counts as one of the most important skills you can develop. It helps you plan your life and gives you more control over how much money you have each month.
You should know how much money you need to support yourself each month. If you don't know this amount, it is impossible to keep a budget of any kind. The Practical Money Skills website suggests that you keep a diary of all your payments and how much you spend, including incidentals such as a random candy bar or cup of coffee. Carry around a little pocket journal. Jot down the amount of everything you buy or every bill you pay. At the end of the month, you'll have an idea of how much you'll need and where you can skimp. Once you cross-reference your expenses with your monthly bank statements, it's time to write a budget.
Your Money Sources
You should know where all of your money comes from and how much you can expect. Keep track of this amount in the same way that you tracked your expenses. If you work a job while you attend school or you get an allowance from your parents, add the amount of your take-home pay to your budget. If you receive student loans each semester, write down that amount and cross-reference it to the expenditures column in your money diary. Ideally, your intake of money should be more than what you spend. If it's not, look at your expenditures honestly and make changes in how you use your money each month.
Fit in Your Goals
When you write your budget, remember to add in your goals. This requires you to think about how you'll use your money before you spend it. For example, if you know that you want to take a snowboarding trip during winter break, build that into your budget. The same goes for a new computer for school. To add these items to your budget, determine how much the item or trip will cost you. Then break the total amount down into monthly payments that you put into your savings account. Take your trip or buy your computer only after you have the money for it in the bank. Treat this like a debt that you must pay. However, you'll pay off the debt before you incur it, allowing you to keep to your budget.
In his book "The Total Money Makeover," financial guru Dave Ramsey recommends writing a new budget each month. This gives you some wiggle room and allows you to make adjustments to your college budget as your circumstances change. For example, if college tuition counts among your expenses and you plan on saving up for it, then put that amount in your budget each month. Once you've paid that bill, readjust your budget to reflect either new payments that you owe or bills you'd like to pay off.
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