Tuition, housing, books, groceries, maybe the occasional night out… managing money as a college student is tricky even under the best of circumstances. Feeling nervous about money is part of starting life on your own. The most important thing is embracing that nervousness and asking yourself a few questions that will help you understand your relationship with money. With a little practice, it’s possible to make life on a college student budget a little more manageable, and maybe even build up some savings along the way.
Let's get started:
Track your spending: get an understanding of where your money goes
Set your goals: define what budget success looks like for you
Build better habits: learn how to cut back, not out
Monitor and adapt your plan: keep tracking your spending and fine-tuning your budget
Grow your money: emergency funds and side hustles
Step One: Track Your Spending
Building a budget is not as hard as you think – it all starts with a simple step: track your spending. One way to do this is to start a spending journal where you document every single purchase you make over the course of a month. This process will help you understand where your money goes and identify where you spend more than you expected – you might be surprised by how much money you spend on coffee. If you like, you can use a good old-fashioned notebook or spreadsheet, but there are also plenty of apps to keep track of spending.
If you're a BECU member, try Money Manager, accessible via Online Banking.
Step Two: Set Your Goals
Managing your money well means making financial rules you can live by. Start with a short-term plan to know how much you are spending, and cover your current expenses. Then, think about your longer-term goals: saving for a new laptop, the first road trip with your friends, a car, or even just a goal to save up a specific dollar amount. With your savings goals in mind, you can start creating your budget plan. Add up your monthly income, allowance, or any other source of money coming in. Then, subtract your expenses based on what you've learned from your spending journal. What's left is the monthly savings you can dedicate to your goals.
Explore more goal tips through Better Budgeting.
Step Three: Build Better Habits
Chances are, your savings goals and your actual monthly savings won't quite align. That's ok! But it does mean you may need to make some decisions about how to stop spending money on things you want to save for things you need. When planning a budget, the biggest consideration is where to cut back, not out. Treat yourself to a tasty bubble tea or an improv show, but setting some boundaries about how often you indulge will help keep your new budget on track. Other ways to save include buying used textbooks, opting for public transportation instead of driving, or exploring more student discounts.
Step Four: Monitor and Adapt Your Plan
Once you've committed to your monthly budget, keep tracking your finances using your spending journal or budgeting tool. Be honest with yourself about how your budget is working. You'll probably need to tweak your spending and saving decisions as time goes on. If you spend more on eating out than you expected, try to make room for it in another part of your budget. The point is to make a budget that works for you – it doesn't have to be perfect.
Step Five: Grow Your Money
Once you've mastered the basics, start thinking about how to keep your financial goals on track long term. A great place to start is by saving up an emergency fund – ideally $500 - $1000 that you set aside and only touch in the event of an unexpected bill, car repair, or other important situation. You can even set your emergency fund aside in a separate BECU Member Advantage savings account so that you don't accidentally spend it on day-to-day expenses.
And if you're really feeling ambitious, consider picking up a side hustle to earn money. Good side hustles, like becoming a tutor or finding a part-time job, are an investment of time and energy, but they can make a real difference in achieving your savings goals.
There you have it – 5 easy steps to create your first college budget. Try them out, be honest with yourself, and when things don't go exactly right, that's ok. Like eating healthy, exercising, or flossing, budgeting is all about sticking to your long-term plan, not getting it perfect every day.
Open a Member Advantage Savings Account
This is for informational purposes only and is not intended to provide legal or tax advice regarding your situation. For legal or tax advice, please consult your attorney and/or accountant. Investments are not federally insured, not subject to credit union or affiliate guarantee, and may lose value.