Budgeting skills you develop while still in college already separate you from being financially savvy after college. While this is true, many college students see budgeting as an impossible task, as they are yet to learn how budgeting helps students stay in school. So, they consider it stressful and often tune out whenever they come across budgeting.
In this article, I will discuss how budgeting can help students in college or university and also touch on the six in-demand budgeting skills for every student. Follow through!
Is Budgeting Important To Students?
Often, college or university students need to pay more attention to a vital life skill they neglect in college. And a significant contributor to this negligence is the overwhelming burden of workloads in school. So, they decide to wage off “additional stress” as they think the subject of budgeting would be to them.
But, here is the side effect of waving-off budgeting as a student in college or university:
- Unstable finance every semester—being broke every time.
- Inappropriate spending habits are inevitable—no caution in fun spending.
- Lack of management of student loans—no strategy to pay back loans with scary interests.
- No focus on your academic pursuits in college and after that.
With the above side effects, budgeting should not be stepped underfoot by you as a college student, as it can help you in the following ways:
- Track, tame, and cut your expenses in school and after that.
- A need to develop a life-saving skill—budgeting.
- Sustainability with or without an income.
- You get to shield yourself against unexpected outcomes– like a sudden increase in rent because of a well-structured budget.
- Self-fulfillment—accomplishing both short and long-term goals in school and after that.
Six In-Demand Budgeting Skills For Students
Knowing how budgeting helps you as a student is one step out of the cave. But then, practicing these powerful six in-demand budgeting skills prepares you for a healthy financial future:
Choose the best budgeting technique that works for you
Starting simple can entirely make budgeting more straightforward than you expected. The first step in making your journey easier with budgeting is selecting a specific method that best meets your budgeting needs.
Would you prefer the 50/30/20 budgeting rule that helps you distinguish specific percentages of your income spending into three categories? Here is a breakdown of this rule:
- 50% allocated to your basic needs such as tuition fees, textbooks, rent, groceries, etc
- 30% allocated to your fun packages or wants, such as handouts with friends, Netflix subscriptions, etc.
- 20% is allocated to savings for short and long-term pursuits such as paying back student loans with accumulated interest, emergencies, purchasing a personal computer, etc.
Or maybe the manual Envelope budgeting method would help you manage the urge to spend more after you’ve exhausted a certain amount for your wants.
Here is how it works. You put a certain amount of money in an envelope for your different spending categories. After you’ve spent all the money you put in the envelope for those monthly expenses, you refuse to touch other envelopes for the other class of spending until the next month of budgeting for such costs.
Whatever budgeting method you choose is acceptable, provided it works perfectly for your budgeting needs over time. Moreso, there are many other budgeting techniques you can research and pick from, as you are not restricted from the ones mentioned here. So, explore more and more out there!
2. Break your budgeting into sections and subsections
Splitting your essential and non-essential expenses into categories can be an easy tracking system during budgeting. This is even faster and seamless with budgeting tools–a spreadsheet, as you don’t need to crack your brain to remember your old and recent expenditure categories.
For instance, in the format below, you can use a spreadsheet to outline your various budgeting sections and subsections using the 50/30/20 budgeting rule of needs, wants, and savings from your $2,000 after-tax income.
Essential expenses–$1000 every month(50%)
- Fixed costs— tuition fees, rent, phone bills, etc.
- Variable costs—gas bills, textbooks, etc.
Non-essential expenses–$600 every month(30%)
- Entertainment, etc
Savings–$400 every month(20%)
- Payment for a 4 years student loan.
3. Track, Tame, and Cut down expenses from your budgeting sections
Grouping your expenses in sections during budgeting allows you to easily track where a certain percentage of your income is directly going. You can always account for those expenses in their areas and then change any items during budgeting.
Tracking the expenses you already grouped into various sections of your budget helps you tame or monitor those expenses. You can cut down costs from those sections, whether fixed or variable, recurring or non-recurring items.
For example, while reviewing your grouped budget expenses sections as a student, you may find that reducing a certain amount from your monthly shopping fixed rate is possible, allowing you to save more.
Also read: Can Loans Be Written Off?
4. Automate part of your income to savings
Because of the variety of expenses that already await you, and the risk of forgetting to save once you receive a credit alert, it is safe to automate at least 10% to 20% of your income straight to your savings account.
By so doing, you don’t need to worry when splitting your income into designated sections of your budgeting sections into your needs and wants expenses because you have it in mind that your savings section is already taken care of.
5. Be realistic enough to say “NO” sometimes
Self-improvement budgeting skills that can help you stay focused on your short and long-term goals in your budgeting journey in college is simply being realistic enough to say no to certain spending habits.
The courage of not saying no to unnecessary spending by many college students has resulted in reckless spending, mismanagement of income, borrowing, and inability to pay back in the future.
Remember, you have to save up for your upcoming projects, so why give in to the desire to spend that extra $10 on Starbucks that your forthcoming project fees would be grateful for next week?
6. Repeat these skills again and again to master them
Do you need a consistent result for your three-month budget plan in college? Then make sure to repeat the above skills repeatedly to master them as quickly as possible. Remember, they are easy, simple, and seamless for a start and can accomplish your budget plans. Let’s recap them once more.
Firstly, pick a budgeting method that suits you, for example, the 50/30/20 or the envelop rule. Secondly, arrange your budgeting expenses in sections and subsections. Thirdly, organizing your payments in sections during budgeting helps you track the exact direction of your after-tax income and possible ways of cutting down costs.
Furthermore, remember your short-term and long-term goals during budgeting, and outrightly say no to unplanned spending like impromptu hang out with friends, except in emergencies.
What about saving 10% to 20% of your income? Automating 10% to 20% of your income to your savings account will save you heartbreak during an emergency.
Definitely going with the 50/30/20.
Isn’t it coincidental that drafting out a budget was on my mind 2 days ago.