College is the time for fun and freedom, but it’s also the time to start getting your life on track. While it might seem like managing your finances is years away, the truth is, outside of buying a home, college can be one of the most expensive times of your life.
Unless you’re one of the lucky ones who doesn’t have to work while you go to school or take out loans to afford it, you’re going to have to get your financial life in order.
Now, you might think, “Oh I’ll worry about budgeting later! I just want to focus on my classes and having fun with my friends.”
Let me tell you, I also had that thought and that’s how I ended up with over six-figures of school loan debt. If I could go back and do something simple like start a budget, I wonder how much of a difference that would have made on that end number. Sure, I had to still take out student loans no matter what, but the end result might not have been so painful.
At the same time, budgeting in college is not all about cutting everything out and living on rice and beans. Here at MSTRPLN, we want to take the pain out of budgeting and show you that you can have fun while getting your money under control.
Taking control of your finances gives you a certain level of confidence, and that confidence can carry you forward in your life. Just like how a little discipline can give you freedom later on, a little budgeting can help you live your dreams. Let’s dive into how to create your first pain-free college budget.
Calculate your average income
Before you set your budget, you’ll need to get an average of how much you make. The easiest way to do this is to take the last three to six months of income and figure out the average.
When it comes to setting a budget, you never want to assume your highest-grossing months are your average. There will always be lows in a financial journey, and you’ll need to be prepared for it. Ideally, you’ll want to base your budget off your worst month of income, but the average will work, too.
Calculate your average expenses (and add 20%)You might need to go through some past bank statements to get an average of your expenses. I know, I know, it’s time consuming, but I promise you it’s worth it.
Every budget is incredibly personal, but generally some categories will include:
- Eating out
- School supplies (books, binders, etc)
This can also be the step that’s the most illuminating. It will give you a true picture of how you spend your money and where it goes. I recommend adding in the 20% on top of that number because so often in life, there’s emergencies (or fun events!) that come up. Building in the wiggle room can give you peace of mind knowing you can cover them.
Make sure you also keep track of any big expenses you have around the corner. These are also called sinking funds and you can watch my video on that: here.
Essentially, it means you’re going to prepare for big expenses in advance instead of scrambling and putting yourself into debt when they come up.
Figure out your goals
Now, most budget advice gets to this step and they essentially tell you, “Cut out everything! Never have fun again!” Let me tell you from personal experience, beating yourself up doesn’t get you very far.
Here at MSTRPLN, we take the opposite approach. Sure, it’s important to cut things out of your budget that don’t matter. However, it’s way more powerful to set some goals so you have a reason to cut things out of your budget, side hustle if needed, and focus on what you want from your money and hard work.
Imagine you have a dream Spring Break vacation you want to date. Isn’t that far more motivating to save for and stay on budget than beating yourself up for getting too many coffees?
This is also the time to think about side hustles and increasing your income if you find that you’re not able to hit your expenses or goals with your current income.
Track your budget
Now that you have your numbers and you have your goals, it’s time to do the work of tracking your budget.I recommend checking out our Academic planner (buy yours here!). Each month and week you have a chance to get in touch with where your money is going and if you’re hitting your important numbers. This can prevent you from making mistakes with your finances and can help you get on track to reach your goals.
Want more in-depth budgeting advice? Check out my budgeting video: here.