Personal Budget Guide

College is an ideal time for social work students to learn how to manage their expenses and make the most of living on a limited income. One of the best ways to accomplish that is creating a budget.

Despite the fact that only 41% of Americans use a budget, it is the best way to track your spending habits. Most people have a general idea of how much money they have to spend, but the only way to be certain is to track it. When you make a budget, you total up your earnings and expenses, allowing you to see exactly how you are spending your money and even put some away for future needs.

Creating a budget is relatively easy. Use this guide to learn basic terminology, how to track your spending, and help you identify resources and easy ways to stick to your budget.

Getting Started

Budgeting Terminology

Total Income: This amount represents all the money you receive, including wages and financial aid.

Monthly Income: This figure represents the amount of money you make in a month. If you are paid hourly, this amount will vary.

Discretionary Income: This amount of income represents what you have left to save or spend after deducting essential living expenses, taxes, and school costs.

Essentials: The items and services you require in your daily life as a student are considered essentials, e.g., housing, food, books, clothes, and tuition.

Nonessentials: Things you might spend money on that you could live without — like dining out or attending a concert — are nonessentials.

Fixed Expenses: These recurring monthly bills are typically the same amount each month. Examples include your cell phone bill, car insurance, and rent.

Variable Expenses: These monthly expenses reflect your lifestyle as a college student and can change depending on what you do or buy. Entertainment and food are often variable expenses.

Emergency Funds: These funds allow you to handle unexpected expenses like a car repair, a broken cell phone, or medical emergencies.

Track Your Spending

1. Assess Current Financial Spending: Start creating a budget by looking at your current spending. To do this, get copies of your last few monthly statements by logging into your bank or credit union account. List everything you spend money on in a typical month as well as the amounts you pay.
2. Categorize Expenses: Put the items you listed above into the categories of “essential” and “nonessential.” Expenses you cannot do without are essentials. This includes rent, car payments, tuition or student loans, and insurance. When it comes to food, clothing, and travel, only what you really need is essential. There may be other essentials for you as a student, such as books, course materials, and internet access.
3. Do the Math: Add up your essential items for a typical month. Then, subtract this amount from your monthly income. This figure is your discretionary income for the month; you have this much to spend on other things you want, put away into savings, or use for paying debts.
4. Create your Budget: Think about your discretionary income as you create your monthly budget. If it is a negative amount, you are spending more than you make each month. In this case, you can either increase your income or decrease your spending. You may be able to work more hours, but if you are a student living on loans, you probably can’t increase your income much. Instead, you’ll need to scrutinize your expenses, even the ones you listed as essential, and consider less expensive ways to meet your needs. Eating out less and switching to a cheaper cell phone plan can help cut costs.

Once you have figured out what you can spend each month, this list makes up your new budget. When finalizing your budget, consider the 50/20/30 rule, recommended by most budget planners. Essential items should consume half your income, another 20% should go into savings for future needs, and the remaining 30% is for nonessential items. As a student, your budget may not follow this general rule exactly, and that’s okay.

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Maintaining Your Budget

Your budget is a tool you will use over the course of a semester or a school year. During this time, your income and expenses are not likely to change much, so neither should your budget. However, you may need to make some minor adjustments after you start using it.

Track your spending regularly and review your budget each month. Doing this will teach you to live within your means and change your spending habits if needed. If your income and expenses each month aren’t keeping within your budget, consider changing your budget or your spending. Your budget will need to change as your financial circumstances change, so be sure to update it once or twice per year.

Budgeting Tools

Left to Spend: With this budgeting app, users enter financial data to create a daily spending limit. The app keeps a running total and updates each day. Whenever you incur an expense, you input the dollar amount. The remaining amount on the screen tells you how much money you have left to spend.

Microsoft Excel: You can use Microsoft Excel spreadsheets or Google Sheets to create a budget. Set up the columns you require and add formulas to total your income and expenses. If you prefer not to set up your own spreadsheet, thebalance.com offers free tools online, which you can tailor to fit your particular budgeting needs.

Mint: Available for free on both Android and iPhone, this financial app enables users to set goals, make budgets, track spending, and connect to financial institutions. Once you set up your accounts, sync them, and create spending categories, Mint will correctly categorize any repeating transactions in the future.

Personal Capital: This company uses technology to offer both financial software that allows you to manage your financial portfolio and personal financial advising. Their advisers can help you build a budget enabling you to analyze transactions by category, merchant, and date.

Simple.com: This checking account includes tools for budgeting and does not require a fee. Using Simple’s safe-to-spend feature, you can see how much money you have to spend once you enter all your bills and regular expenses into the system. You can even set aside funds in a digital envelope to use later for something you want or need.

Wally: This free budgeting app is available for both Android and iPhone. Wally enables you to compare your income and expenses, and can help you see where your money is going. This app does not link automatically to any of your bank accounts.

YNAB: Available for Windows, Mac, iOS, and Android, this personal budgeting software is currently free for college students ($6.99 per month regularly). YNAB’s latest release allows you to import your financial data with one click. This software boasts technical support that will get back to you within 24 hours.

Tips for Cutting Costs in College

• Adopt Healthy Spending Habits: As college students gain more financial independence, they should develop good spending habits. You can build your credit by using a credit card responsibly and paying off the balance each month. By tracking your spending regularly, you will know exactly where your money is going so you can make adjustments before running into financial difficulties. Online resources and apps such as Spending Tracker, Habitica, and Slice offer easy and fun ways to help you track your spending and practice good spending habits.
• Prepare Meals at Home: Yes, dining out is fun and easier than figuring out what to cook, but it is also expensive. Planning meals each week and preparing them at home is cheaper than going out. People that spend about $10 going out to lunch each day pay an average of $2,500 per year, while people who bring their lunch from home only spend about $6.30 per meal. Meal-planning apps can help with this task. When you do decide to dine out, CheckPlease Lite helps you split the bill.
• Use Student Discounts: Several companies offer student discounts, so always carry your student ID with you, and ask about discounts whenever you can. Many stores and online retailers also offer discounts that may not be very noticeable; some even offer student discount programs you can register for. Finally, campus student organizations may provide discounts or advertise them with local businesses. Check on campus for free and inexpensive activities offered for students such as concerts, films, and athletic events.
• Find Cheap Textbooks: Look for used books in your campus bookstore and through online textbook exchanges. Share books with a classmate. Find out if your college library or any campus student organizations rent books or have textbook reserves. Compare prices and check for discounts with online sources like StudentRate Textbooks.
• Graduate Earlier: Finishing your degree early can save you money. Credits earned through advanced high school classes, community college classes, or online courses can help you graduate earlier and for less money. Since changing majors means having to take additional required classes, be careful when choosing your major. Also, take the full or maximum course load if possible.

Additional Resources

Tiller: Once you link your bank accounts into one of Tiller’s premade Google Sheets, you get an accurate picture of your finances on a daily basis. Tiller costs $4.92 per month.

Better Money Habits: Bank of America and Khan Academy teamed up to offer this informational website that shows you how to create a budget. It provides links to additional budgeting resources.

Federal Student Aid: The federal government provides detailed information on how to create a budget for college students. This online resource also includes examples of expense types.

Pocket Guard: This app creates your personalized budget automatically, using the information you enter about your income, expenses, and financial goals. It offers a clear picture of how much you have left to spend.

Good Budget: Based on the old-fashioned envelope method of saving for bills, this app enables users to put money away into expense categories that are tracked and funded automatically.

Toshl Finance: You can track two financial accounts for free with Toshl’s basic budgeting app. An upgrade allows you to monitor and sync any number of accounts.