In the midst of the ongoing coronavirus pandemic, college students across the country have not only been forced out of normal classroom lectures to remote learning, but they’ve also been displaced from jobs and any usual means of making money.
Like millions of people in the US, college students are facing both housing and job insecurity but amplified to a degree that students have not experienced before. Due to the spike in recent unemployment rates, college students are facing the worst job market in modern history, while simultaneously still accruing astronomical amounts of student debt, Jessica Dickler of CNBC writes.
With millions of college students fearing for their financial future and questioning how to effectively balance what they do have in their bank accounts, learning the best ways to budget money is the key to controlling a situation that is more or less, out of anyone’s control.
Are you a college student affected by the coronavirus pandemic? Do you feel financially restricted and insecure? Looking for ways to budget money and eliminate stress from your daily life? These five tips will point you in the right direction and help you budget your money like a pro!
1. Start with Your Net Income: The main important step in budgeting your money is starting with your net income- you can’t know what you can spend without first knowing what you have! In college, you may have money coming from different tunnels, such as a part/full-time job, scholarships, grants, etc. Gather a list of your net income which includes income from jobs, freelancing, allowances from parents, grants, etc. and be sure to take into consideration any taxes if you freelance! Having a net income in your budget will set up a better foundation for calculating your expenses!
2. Calculate Expenses: Get a binder, notebook, or use a Word doc on your computer to create a list of everything you spend and what needs to be paid each month, along with your monthly income. Include things like a phone bill, a car payment, insurance payment, gas, groceries, student loans, electric, water, gym memberships, subscriptions (i.e. Netflix or Spotify), etc.
Additionally, you can add the ‘expense’ of deducting money from your income for your savings account. Add up the total amount that you either currently pay or estimate that you will pay, then deduct this from your monthly income. Do you have enough cushion room to relax or are you cutting it too close?
3. Determine What is Fixed vs. Variable: When budgeting your money, it can sometimes be hard to differentiate between what you need versus what you like to have. Often times we become accustomed to a certain lifestyle and feel as if there are no alternatives to how we spend our money, and most importantly, what we spend it on. Thus, it is necessary to determine what expenses of yours are either fixed or variable. Fixed expenses are bills that need to be paid, no matter what. These types of expenses are unavoidable and will include costs such as rent/room and board, transportation costs, groceries, etc.
Variable expenses, on the other hand, are bills that can be more flexible, if need be, such as a subscription service like Netflix or Spotify, take out food, travel, etc. Alexandria White of CNBC notes, “If your income were to decrease, you could always cancel your gym membership, postpone a vacation or reduce your takeout spending without much fallout. But you’re likely always going to have to pay for rent/room and board, transportation, and insurance.”
4. Create an Emergency Fund: Part of the reality of being an adult is having a financial cushion in case life takes an unexpected turn. You may think of budgeting money as something that includes the money you spend, but budgeting can also include money you put aside in a savings/emergency fund as well. Not everyone has the ability to put aside an extra $50 or $100 a month in savings, but if you have the ability to take even a little extra from your income, this will add up in the long run.
5. Cut Costs When Possible: Eliminating unnecessary expenses when possible is the key to taking control of your finances and being financially secure. When going out is a frequent occurrence, you don’t really notice how much money you burn through on endless apps and $2 happy hours. Consider cutting back on going out on weekends or meeting your friend for drinks after work. Additionally, you can save money by limiting your Starbucks trips, limiting your Uber/Lyft rides, ditching cable, etc.
Budgeting in college during such an unpredictable pandemic can be difficult, but managing your money in small, simple steps will not only help you feel more in control, but it will also make your life much easier!
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