When you start college, it can be overwhelming to juggle classes, work, and social interactions because it may be the first time you have to manage all of it on your own. While you figure out your new independent life, one thing you can’t forget about is your finances.
It’s very easy to blindly bring in money from your job and pay your bills without tracking, but not only will that undoubtedly lead you to money troubles, it’s also not a sustainable practice. If you never know where your money is going, you can’t direct it to the right places or save for a rainy day. One emergency is all it takes to land you in hot financial water.
However, there are ways to avoid common money traps while in college, and it all starts with a budget.
Create a Budget
You might think that creating a budget isn’t necessary if you don’t have a lot of bills. After all, you’re a college student, and maybe you only have a few recurring expenses you have to pay. But if you don’t set up a budget to track where your money goes, it will be nearly impossible to get anywhere financially. Plus, your wallet will not likely be ready for the emergencies that inevitably pop up in life. So, no matter if you have just a few bills or many, it’s crucial that you set up a personal budget and understand things like debt, loans, and what is a secured line of credit to begin with.
First, write down your income. Then write down every expense you have, including holiday and birthday gifts, money to socialize, gas, food, and every other bill or payment that takes your cash. Finally, subtract your expenses from your income and make sure the difference is zero.
As you go through your month, keep track of every dollar you spend by recording it next to the appropriate category in your budget. Doing this will ensure you have money set aside for every expense before it comes due. You’ll even have the cash to enjoy college life without blowing everything on a crazy weekend binge.
Look for Free Activities
Just because you have money set aside for everything you need, including fun, doesn’t mean you have to spend it on every activity you do. Try to fill your time with free local activities while you aren’t studying. Pretend you’re a tourist in your town and look at the place you live as though you don’t reside there.
Check your town listings or maybe that wall-mounted glass board in the activity room at college for events you can participate in at little or no cost. Getting involved in your community is a great way to meet new people and network for connections after you graduate. Not only that, you’ll have a good time along the way without using your hard-earned funds.
Automate Your Savings
Setting up your budget isn’t only about covering expenses; it’s also about saving for your future. Whether your car breaks down or you want to start saving for retirement, the best way to sock away money without thinking about it is to automate.
Write savings directly into your budget as a line item, decide where you want your money to go and have it come out automatically without you having access to it. Don’t leave it up to yourself because there’s always something that will come up, and you’ll spend the money on that instead of saving it. Your best bet is to set it and forget it. Before you realize it, your savings will grow, and you’ll begin your journey to growing wealth.
Evaluate and Reevaluate
Managing your money in college is no different than at any other time in your life. Set up a budget you can live with and evaluate how it’s working every few months. If something isn’t working, adjust where necessary and keep going. Once you establish a routine, you’ll wonder how you managed it any other way.