Defining your personal budget can lend structure to your spending habits. It is a way of organizing your use of money by thinking in terms of spending categories and setting priorities. A budget establishes boundaries that you can monitor to pace your spending and it helps you recognize spending limits before you exceed them.

Budgeting as guidance

Thinking of finances in categories helps you discipline yourself in those moments when you are tempted to choose between something you need and something you simply want. Just as a blueprint guides the building of a house, a personal budget acts as a guidance system to steer you away from costly impulses and money-burning behaviors.

Creating a budget while in college can help you:

• Meet personal goals such as studying abroad.
• Remain better prepared for emergencies.
• Stay out of debt.
• Keep accurate and up-to-date records.
• Prepare to begin thinking about longer-term financial planning.

College Budgeting 101:

• Identify your income sources. Income can include your allowance from home, take-home pay from student employment, savings allocated to college expenses, interest, dividends, gifts, grants, student loans, and scholarships.
• List fixed and variable expenses. Fixed expenses are exact amounts due on a specific date. Variable expenses include money spent on wants and needs that are irregular in nature.
• Review and modify the plan. If expenses exceed income, identify ways to increase income or reduce expenses. This is not difficult, but doing it right is terribly important to your economic well-being at college.

View a short video on budgeting.

Peer pressure and conveniences such as automatic teller machines can play havoc with student budgets because ready cash makes it easy to buy things on a whim. A budget can help you sidestep impulse spending. It puts you in control of the decision to buy or not to buy based on your needs and available cash.

Budget Format

The time period of a student budget can be a month, a semester, or the school year. After listing all income, estimate how much money you will spend on the fixed and variable items in your budget. Fixed items are a constant and easily defined. Variable expenses are more difficult to identify because of their changing nature. Keep a daily record of your expenditures for a few weeks to better estimate the kind and amounts of your variable expenses.

Examples of Fixed Expenses

• College room and board, dormitory meal plan, or off-campus housing.
• Car payment and insurance; if you have a car.
• Health insurance; if not covered by parent's policy.
• Tuition, a fixed expense, may vary depending on course load.
• Other fixed expenses, such an emergency fund and other savings.

Examples of Variable Expenses

• Books, lab fees, equipment, supplies, tutoring, etc.
• Snacks, drinks, groceries, restaurant meals.
• Telephone bills, including long distance calls.
• Social and recreation expenses such as movies and sporting events.
• Transportation - plane, train, bus, cabs, car maintenance, and parking.
• Personal expenses such as toiletries, haircuts, and laundry.
• Clothing - new purchases and dry cleaning.
• Health care - prescriptions, doctor or dentist fees.
• Other expenses - such as dues and gifts.

Compare total estimated expenses with your total income, and then adjust the variable expenses in order to balance your budget. Your spending practices will have a significant effect on shaping your financial security, and a budget helps you keep spending from getting out of control. Effective use of a student budget will help you gain the sense of independence that comes from being in control of your personal financial affairs, whether you have "plenty of money" or limited income.

Tips to help you stay on track

• Start your new budget at a time when it will be easy to follow and stick with the plan (e.g., the beginning of the year or semester, as opposed to right before the holidays).
• Check your spending on variable expense items several times each month.
• Find a budgeting system that fits your needs (e.g., budgeting software).
• Distinguish between expenses that are "wants" (e.g., designer shoes) and expenses that are "needs" (e.g., groceries).
• Build rewards into your budget (e.g., eat out every other week).
• Avoid using credit cards to pay for everyday expenses. It may seem like you're spending less, but your credit card debt will continue to increase.

The following links allow you to calculate your budget using established income and expense categories.

STUDENT BUDGET

HOME BUDGET

The following link is a blank expense worksheet that you may print and fill in your expenses. You may customize the layout to a format that works for you.

www.budgetworksheets.org

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