As you prepare for a new year at college, managing your money may be the last thing on your mind. But, college is the perfect time to instill strong and healthy financial habits, such as budgeting and living within your means. While we all know that having a budget is important, it's easy to forget to sit down and dedicate time to creating and maintaining one — especially if you're in college. But when it comes to managing personal finances, creating and using a budget is absolutely essential. By starting on the right foot with good saving and spending habits, you'll have a good chance to set yourself up for a life of financial success.
What areas do you spend the most in? What goals are you saving for? As a student, you'll have a different set of priorities and financial responsibilities than if you were in the workforce. You may have a part-time job or rely on your parents to help cover expenses. It's important to remember that your expenses will extend beyond tuition. Here are a few categories to keep in mind as you create a budget and continue to track costs at the end of each semester:
Living with family while you attend college can be a great way to save money. If that isn't possible, you have a couple of options:
Even if your parents provide the money needed for housing or food, budgeting those items is a good idea. Working on developing smart habits and taking accountability for how you save and spend during your college years will benefit you in the long run.
Textbooks can be an expensive addition to your budget. With the average cost of textbooks at $1,298 a year, books are a cost that shouldn't be overlooked. Luckily, there are plenty of ways to spend less on textbooks. Buying a gently used textbook rather than a brand-new one — or buying an e-book instead of a printed textbook — can save big bucks. Many retailers online or on-campus offer the option to rent books for a reduced price. You can also make some of your money back by reselling your textbooks at the end of the year to certain retailers or fellow students. Or cut costs entirely by looking into whether your school provides a free book exchange with other students.
Budgeting for food will depend largely on whether or not your housing offers meal plans. If it does, you will likely be charged a one- or two-part payment. Most schools offer several tiers of meal plans, so you can choose what's right for you without overspending. If you aren't relying on a meal plan, explore all of the stores around you for the best deals on groceries — some stores will sell the same product at a higher markup than others. You may also be able to find coupons and deals either in-store or online. Of course, being in college doesn't mean you can't indulge yourself. Take the bite out of restaurant costs by choosing water over expensive drinks, or splitting an appetizer (and its cost) with your friends. Decide what makes the most sense for you between classes, whether it's packing a lunch you can eat on campus, stopping at a cafe, or picking up a bargain takeout meal. Download the free Lunch Tracker App for iOS to track how much you spend on lunch and find out what you're able to save. Whether a store-bought burrito or a homemade meal, it adds up.
At college there are plenty of opportunities to have fun without spending loads of money. Keep up-to-date on upcoming school events, many of which may be cheap or free. Cooking meals with friends can be a great form of socializing while saving, but if you decide to treat yourself and want to go out to eat or see a show, remember to take advantage of any discounts that may be available for college students.
In most college towns, having a car can become an inconvenience. If possible, save the money you would spend on parking, insurance and gas, or use public transportation instead. Parking can cost hundreds or even thousands of dollars per year. If you don't need to travel far, ride a bike or walk. It will save you money and it's the perfect way to get exercise — for free.
Budgeting isn't just about expenses — remember that if you're working part-time or have a paid internship, the income you make should be logged in your budget. Tracking this money will give you a better picture of your financial situation overall, and you'll be able to see exactly what happens to the money you work hard for. If you're eligible, Federal Work-Study provides jobs for students with financial needs, giving them the opportunity to earn money to pay for their education while they're still in school. Keep in mind that while part-time work is a great way to support yourself, the education you're paying for should come first.
It may sound impossible to start investing while you are still in school, but there are a lot of millennial-friendly mobile apps that can help you start investing small amounts that can add up in the future. Saving for retirement or paying back student loans may be the last thing on your mind while you are a student, but mobile apps can help you start investing in small increments while learning about the market.
For additional information on what a budget is or how to create one, visit the Budgeting page.