New year! New you! New budget?
A New Year is upon us, and with this New Year comes the attempts at self-improvement through New Year’s Resolutions. (Oh, yes, it’s capitalized.)
The New Year is a time when Americans examine themselves in hopes of identifying shortcomings that can be corrected through gym memberships and juice cleanses. These feeble attempts are often abandoned a few weeks later when the couch-potatoing and bon-bon eating finally commences. One resolution that is too-often overlooked, especially among the college-age youths of America, is the budget. Yes, I am about to suggest that you implement a budget. When people hear the word “budget,” they automatically get uncomfortable and picture a lifestyle where the children have no shoes and the food is reminiscent of the food eaten in a Charles Dickens novel.
Now, I am here to set the record straight and to tell you that a budget is simply a means of finding financial balance. It’s about finding the middle ground between a Jay-Z music video and a Sarah McLachlan puppy commercial.
There are a few things to keep in mind when developing a budget as well as some simple steps to take that will allow you to develop a sustainable and effective college budget.
First things first, make a list of income sources. This list can include financial aid such as grants and scholarships, money from your parents, income from an on-campus job, and savings from a summer job. (Warning: this step includes communicating with your parents, but, let’s be honest, its time you called them anyway.)
Second, add up your expenses, or the money you spend on various things. This step can get a little gnarly depending on your expenses and can include anything from tuition and books to your cell phone bill and groceries as well as fun activities like the J-Biebs concert you won’t admit to going to. Anything that you spend money on should be on the list. I also recommend having a fixed amount on the expense list for savings, just to be sure that you are indeed saving some money for down the road.
In this step it is important to factor in any big-ticket items you need, like that fully functioning, life-size R2D2 complete with Princess Leia hologram you’ve been wanting, as well as money in an emergency fund for when your R2D2 (inevitably) becomes self-aware and turns against you, resulting in some physical and emotional therapy.
With these two lists developed, you can then subtract your expenses from your income to discover your net income. Bam! You’ve just balanced your budget! If this number is positive, you are making more than you’re spending — good job! If this number is negative, then look to cut back on unnecessary expenses like that daily grande double skinny vanilla latte. You’ll be surprised how much you can save (and pounds you can shed) by eliminating that daily latte. (Hint: a grande double skinny vanilla latte is about $4, that’s $120/month, which adds up to $1,440/year! And that’s if you don’t get a scone too!)
And, that, my friends, is how to college budget. The hardest part is over, now you just have to check in with your budget every once and awhile to make sure you are still on track so you don’t experience the hardships of this Black Bear struggling to get by!
From the Finance Wizard, with love.