Congratulations! You’ve graduated high school! Amid all of the celebrations and excitement, you are probably realizing (or have already realized) that you are about the make one of the largest and arguably the most impactful financial investments of your life: College. Post-secondary education, regardless of what option you choose, isn’t free and the accompanying social opportunities mean that the 4-5 years after high school are a great time to start building healthy financial habits or to dig yourself into a deep financial hole. The best way to start building those healthy habits is to budget.
Budgeting can seem intimidating, especially if you feel like you don’t have any money so I’ve broken it down into 3 steps that will work for anyone no matter your income or bills.
Step 1. Figure out how much money you have
Whether you work part-time, full-time, or receive some kind of allowance or other income calculate the minimum amount you can count on every month. Most college students work with a variable income so some months you might have more money coming in. We’ll deal with the extra later but for now, just work with the minimum.
Step 2. Determine your expenses
Write out every bill you are responsible for paying. Some examples might include tuition, textbooks, housing, car expenses, groceries, etc. Don’t include things like Netflix, at this point we are only working with the things you need to live and get to work/school. Figure out how much money you absolutely must spend every month.
Step 3. Allocate whatever is left over
Add up all of your expenses from step 2 and subtract them from the minimum monthly income you calculated in step 1. You get to decide how to spend whatever is left over. You can decide to just stop budgeting now and just spend that money until it runs out each month but it’s much more effective long-term to budget that money as well. Think about all of the things you want to spend money on (things like eating out, makeup, new clothes, going to concerts, traveling, etc.) and your financial goals. Maybe you still live with your parents and want to move out soon, you might want to pay some of the interest on your student loans so you aren’t hit with quite such a large amount when you graduate, or maybe you want to go on an awesome month-long trip to Europe the summer after you graduate. When you are working with varying amounts, the easiest way to budget is by using percentages. Once you know all of the things you want to spend money on each month, assign a percentage of your income to each of them and then calculate the amounts once you know your income amount.
These steps are the easiest part of budgeting. The hard part is sticking to it! Learning to live by your budget takes discipline but it’s so much better to learn it now when you have less money and fewer expenses to worry about.
To make this easier, I created an excel spreadsheet so all you have to do is fill in the boxes with your numbers! You can download that right here: AMaizyLife Budget Template