Do you ever find yourself wondering why what seems to be enough money to last for the entire semester always runs out before the term ends? The answer to this question is simple: failure to implement a realistic budget.
As a college student, you are expected to responsibly manage your financial aid disbursements so they last until the next round comes in. Unfortunately, the likelihood of this actually happening is slim to none for students who aren’t aware of the importance of budgeting, how to create one, and the positive impact it can have on your long-term financial health.
Why You Need a Budget Each Semester
The word “budget” has a negative connotation because it is often associated with some sort of militant regimen that forces you to save every dime of disposable income. However, it is actually an effective planning tool that permits you to disseminate your income over a specified period of time — if used properly.
Just like a curriculum functions as an academic plan for your collegiate career, a budget is a spending plan that dictates your financial well-being.
How to Implement a Budget
To create a budget, follow these steps:
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Compute your total income for the forthcoming semester. This number should include the total amount of grants, loans, private assistance and employment wages you expect to receive over the duration of the semester.
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Calculate monthly fixed and variable expenses. Common expenses include: rent, utilities, cellphones, dining out, entertainment, transportation, car insurance, health insurance and school expenses. Also, be sure to incorporate a slush fund for miscellaneous expenses. If you find it difficult to calculate these figures, track all expenditures for an entire month prior to moving forward with the spending plan.
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Divide the total income by the number of months in a semester. Allocate this figure to each month in the semester.
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Deduct monthly expenses from monthly income.
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If funds remain after all expenses are subtracted from the monthly income, add a line item to your budget for additional saving. It is essential that you save as much as possible during the semester to cover those periods that you may not have any income.
Consistency Is the Key
Budgeting can be a tough feat to accomplish, but the success rate improves with time and practice. In order to remain motivated about your budget, be sure that you are working toward accomplishing some sort of financial goal. Also, be sure to quickly establish an emergency fund to prevent unexpected occurrences from causing your budget to fail in those turbulent months.