College Budgeting

The primary purpose of a budget is to design a realistic plan for spending limited financial resources. A student budget requires flexibility to adapt to the changing circumstances of college life. Essential steps in designing a budget are:

• 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, scholarships.
• List fixed and flexible expenses. Fixed expenses are exact amounts due on a specific date. Flexible 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 rocket science, but doing it right is terribly important to your economic well-being at college.

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 flexible items in your budget. Fixed items are a constant and easily defined. Flexible 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 flexible expenses.

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

Flexible 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, sporting events

Transportation plane, train, bus, cabs, car maintenance, and parking

Personal expenses toiletries, haircuts, laundry

Clothing new purchases, dry cleaning

Health Care prescriptions, doctor or dentist fees

Other expenses such as dues and gifts

Compare total estimated expenses with your total income then adjust the flexible 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 in tow. 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 are operating on a shoestring.