Hint: Budgeting doesn’t have to be boring. It can be fun and freeing!
College is an exciting time. New friends, new experiences, and a whole lot of independence. With that freedom comes responsibility, especially when it comes to managing your money. Whether you're living off student loans, a part-time job, or help from family, creating a budget is one of the smartest things you can do for your future. Budgeting can be part of the excitement. It doesn’t have to be boring.
What Is a Budget?
A budget is simply a plan for how you’ll spend and save your money. It helps you track your income (money coming in) and expenses (money going out), so you can make informed decisions and avoid financial stress. Once you get in the habit of budgeting, it can become one of the most fun things you do. Trust us, there’s nothing like the high of hitting a new BPB (Budgeting Personal Best)!
But I don’t want to be restricted by a budget.
Budgets don’t actually equal restriction. They lead to freedom. A budget gives you the time, space, and foresight to decide what matters to you and how to fit it into your life. It’s up to you how you want to spend your money. Your budget is permission to spend according to your values and priorities, and it is giving your current and future self a roadmap to get where you want to go.
Why Budgeting Matters in College (and Before College!)
1. Avoid Debt Traps
College students often rely on credit cards or loans. Without a budget, it’s easy to overspend and rack up debt that can take years to pay off. With a budget, you help yourself stay within what you can afford, and you help yourself predict when you’ll need extra money, in time to take action to prepare for it.
2. Build Healthy Financial Habits
Learning to budget now sets the foundation for smart money management later in life, like saving for a car, a home, or even retirement. This is Adulting 101. Most adults who are financially stable in their thirties, forties, and fifties, will tell you that it began with strong financial habits in their teens and twenties.
3. Reduce Stress
Money problems are one of the top stressors for students. A budget gives you control and peace of mind, knowing where your money is going. It helps you see financial speed bumps and detours ahead of you, so you can plan a route over and around them. One of the best cures for stress is preparation.
4. Make Room for Fun
Budgeting doesn’t mean cutting out fun. It means planning for it! Want to go to that concert or take a weekend trip? A budget helps you save for it and, later, pay for it without guilt. Your budget should always include money set aside for things that you love doing. Life without fun and freedom is pretty miserable.
How to Start a Budget
Choose Your Tools
Do a little self-analysis about what might work best for you. (Hint: it’s probably similar to how you study and learn best!) If you like working with pen and paper, do that. If spreadsheets are your gig, it’s a perfect place to start. If you find apps on your phone are easiest, there are plenty to choose from.
Old Glory Bank’s Budget and Planning Tools are free within our app, to help you see where you are spending and where you can make adjustments. (Don’t forget to check out our GOALS feature, to save for your big budget items!)
Identify Your Income
Start by writing down all of your incoming money sources: part-time jobs, scholarships, parental support, etc. List the estimated amount you receive from each source in a given month. If the income varies from month to month, start with an average.
List Your Expenses
It’s often best to break down your expenses into categories. Think of what you need to spend money on by week, by month, and by year.
Here are some examples to consider.
Fixed Expenses:
- Rent
- Tuition
- Cell Phone
- Streaming services
- Car insurance
Variable Expenses – calculate the average you spend per month on these:
- Food (include groceries and eating out)
Transportation (bus fare or gas for your car)
- Clothing
- Entertainment (remember – include fun in your budget! Life should be fun!)
-
Charitable giving
Annual Expenses – list the annual amount and then divide by 12 to add to your monthly budget:
- Christmas Gift Shopping
Renter’s Insurance - Annual subscription fees
Plan Your Spending
Now that you have your income and expenses outlined, write down your plan for how the income will cover those expenses. Allocate how much you can spend in each category. Be realistic!
Once you’ve made your first pass, add up your totals. Does your income cover all your spending with some money left over? GREAT! You can decide where you put the extra – think about saving for the future, giving to a cause you care about, or allowing yourself a little more fun money.
Does your income fall short? Don’t let it get you down – let it motivate you to adjust. Is there somewhere in your budget you can cut back on spending? Do you have time in your week to pick up some side work or babysitting to earn more money? Your budget plan helps you see the shortfalls so you can address them.
When you are done allocating your money, and your plan has your expenses equal to your income, you’ve done it! You’ve made a budget!
Track, Review, and Adjust Monthly
Now you are ready to live on the budget you’ve created. Tracking is key. A plan means nothing if you don’t stick to it, and you can only know you are sticking if you track.
Write down what you spend each week in each category, and keep an eye on how well you are meeting your budget. If you spent a little too much on eating out this week, skip a trip to the coffee shop next week to get back on track.
Your budget isn’t set in stone. Review it regularly and adjust as needed. If you find that you are consistently spending a little more in one category each month, that’s your clue to make a change to your spending plan so that you can meet that category's target in future months.
Embrace Your New Superpower
Budgeting might not sound glamorous, but it’s one of the most empowering skills you can learn in college. It gives you freedom, not restriction, and helps you make the most of your college years without financial regret.
