Budget 101: Keep your money in line

Char Telkamp

Char Telkamp

Experience can be a dear teacher when it comes to overspending at college. Many students discover, at the most inconvenient and embarrassing times, that they are out of cash.

The question is what to do. Call home? Borrow from a roommate? Both are short-term solutions at best. According to Citibank’s Credit-Ed program, a better solution is to design a budget.

Peer pressure and conveniences such as automatic teller machines can play havoc with student budgets, because ready cash makes it easy to buy things on a whim. A budget can help you sidestep impulse spending. It puts you in control of the decision to buy or not to buy.

Here are the essential steps in designing a budget.

Identify your income sources.

Income can include your allowance from home, take-home pay from student employment, savings allocated to college expenses, interest, dividends, gifts, grants and/or scholarships.

List fixed and flexible expenses.

Fixed expenses are constant and easily defined. They have exact amounts due on a specific date. Flexible expenses are more difficult to identify because of their changing nature. They include money spent on wants and needs that are irregular in nature.

Review and modify the plan.

If expenses exceed income identify ways to increase income or reduce expenses. This is not rocket science, but doing it right is terribly important to your economic well-being at college.

Keep track of your expenses.

Start keeping a monthly expense record. The goal is to get a picture of where you are spending your money. Your budget should be based on what you really spend, not what you think you spend.

Compare estimated expenses with your total income, than adjust the flexible expenses in order to balance your budget.

Your spending practices will have a significant effect on shaping your financial sercurity, and a budget help you deep spending in line.

Effective use of a student budget will help you gain the sense of independence that comes from being in control of your financial affairs.