Typically, whenever we think about college life we immediately think freedom and fun. Yet, frequently stressing over finances is definitely not “fun” and being chained to an ever-growing heap of debt is not my idea of “freedom”. Money management is a necessary part of a stress-free college life. You’re going to have to start sometime during your life and the sooner the better.
What college students should know about money management:
In order to manage your money properly you must create a budget. The purpose of a budget is to outline a practical plan for spending the limited money that most college students have. Since your income and expenses are always changing, whichever budget you decide to use must allow for flexibility.
First, write down where all your income comes from. This usually consists of income from a job, grants, scholarships, allowance from home, etc. The next step is to outline your expenses. This is much easier if you divide them into two catagories: fixed and flexible.
Fixed expenses are exact amounts that are due on specific dates. Flexible expenses are amounts of money that fluctuate depending on your needs and wants.
Example Fixed Expenses:
– Car payment (including insurance)
– Health insurance
– College Tuition
– Cell phone
Example Flexible Expenses:
– Books and various school fees
– Going over on your cell phone minutes
– Social expenses (movies, dates, football games, etc)
– Personal expenses (clothes, groceries, doctor and/or dentist bills, domestic supplies, haircuts, etc.)
Add up the amount of income and expenses you have (you may need to guess on many of the expenses). Now look it over. Do you have more expenses than your income can cover? If so, you should figure out what you can do to increase your income or reduce your expenses (or a little of both). This process is simple but necessary if you wish to stay out of debt while you are attending school.
It is going to take some sacrifice to reduce your expenses. Many college students are used to spending their money impulsively. This type of poor money management leads to financial bondage. Here are some helpful tips that will assist you in reducing your expenses:
– Pay your bills on time
– Watch out for peer pressure
– Buy used text books
– Avoid impulse buying
– Look for sales
– Stop eating out and buying junk food
– Share an apartment
Everybody is going to need a different type of budget to fit his or her individual needs. However, basic budgets can be found all over the internet, in financial books or just ask your parents to help you create one. Do not allow debt to chain you down. Create a budget, stick to it, and be willing to sacrifice to stay out of debt.
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