Six Ways College Students Break Their Budgets

way college students break budget manage money

 

School supplies are hitting the shelves, and that means a new school year is just about one month away. College students head back to start their fall classes in August, so it’s time to focus on money management in college. Parents, if you are sending your children off to college, make sure they have the financial skills to get started on their own. College students, you need to read this! How many of these mistakes have you already made?

 

  1. The first way to break your budget is by not having a budget at all! So, take the time to make yourself a monthly budget. Consider the income you will get from financial aid, employment, and family. Estimate your monthly expenses for rent, food, and other bills. Make sure you have enough income to pay for all of these expenses. Don’t forget to leave a little padding in your monthly budget for the unexpected trip or opportunity. Try one of these budgeting apps to help.
  2. Grabbing a quick bite to eat or jolt of caffeine in between classes adds up over time. Grabbing a drink and snack at Starbucks can easily cost $10. Get in that habit three times a week, and you’ve spent $30. At the end of the month, you’ve spent $120. Pack some healthy snacks from home in your bag. Carry a refillable water bottle and try bringing coffee from home in a travel cup when possible.
  3. Consider the cost per meal of a meal plan. If you live on campus, you are stuck with the meal plan. You should have a choice, however, about how that meal plan is structured. Typically, you can choose a combination of meals and points or dining dollars. Look at the cost per meal of the plan and how many times you really eat in the dining hall. If you don’t use all of those meals each week, you’ll probably be better off with the dining dollars or points. If you do this, however, make sure to budget and keep track of this money so you are not left starving with a month left in the semester.
  4. Even social events need a budget. One of the great parts of the college experience is going out and having fun with new people. Going out, however, is expensive. Buying a new pair of shoes or jeans to go out adds to that expense. Unless your parents are giving you their credit card and an unlimited budget, you need to think about the cost of going out. Limit the number of days you go out (also a great plan since you need to study!), find things to do that don’t require spending money (Netflix and chill slumber party), and try shopping in a friend’s closet.
  5. While on the subject of social activities, be careful not to get involved with too many campus activities. There are so many new activities and groups to explore on campus, but they usually involve paying a fee for membership dues or group activities. Over the course of a year, these activity fees and expenses can add up to several hundred extra dollars that were not in your budget. All of these activities can really take away from your study time too. Limit yourself to one or two groups for at least the first year of college.
  6. Think about whether you really need to bring your car with you. Parking spots on campus can be very expensive, and many universities make you park your car a mile away from campus anyway. So, having a car can be both expensive and inconvenient. If your campus is part of a town or urban area, a car might not be necessary. Explore and consider the other transportation options before you decide to pack up your car. I went to college in Newark, Delaware and did not have my car with me until my final semester. The campus and town were very walkable, and trains and buses were available when we needed to get out of town. Plus, Uber is available in more locations all the time and makes it much easier to get around without your own car as needed.

My Four Favorite Budgeting Apps (and they are free!)

four favorite budgeting apps

 

As a finance professor, people ask me a lot of questions. One of the most common questions is about ways to make budgeting easier or if “there is an app for that.” There are two difficult parts to the budgeting process. The first part is sitting down to actually make a budget. The second part is knowing where you are in your budget and sticking to it. For me, this is by far the more challenging task because it takes time to record your expenses. I’m always looking for an app to help make my life more efficient, so I have actually tried a lot of budgeting apps over the years. Today I’ve decided to share four of my current favorites.

 

mint money budget app
Mint: Money Manager, Budget, and Personal Finance is a free app that provides a complete money management toolbox for users. You can connect all of your bank, credit card, and investment apps to your personal Mint account and let the app do the rest. Mint will keep track of your spending and income and even make suggestions for how you can improve your budget. If you want an app that will literally track and do everything for you, Mint is the way to go. Personally, I don’t want to use this app for security reasons. I don’t like the idea of tying all of my financial accounts into this one place. If you don’t mind, however, you won’t find anything better than this.

 

daily budget original money budget app
Daily Budget Original is a free app that provides you will a daily budget after you enter your monthly income and fixed expenses. Since it does not connect to your bank account, there is some work on your part. Each time you make a purchase, you’ll need to enter that into the app so that it can deduct that dollar amount from your daily allowance. However, the app is simple and easy to use.

 

mvelopes money budgeting app
Mvelopes is a nice, free app if you are fond of the envelope method of budgeting. You can set up the categories, or envelopes, of your monthly expenses as needed. These are fully customizable, so you can have just a few, broad categories or envelopes for individual expenses like cable, coffee, cell phone, gym membership, etc. Mvelopes will also connect to all of your financial accounts (like Mint) and automatically deduct your expenses. Again, this has the benefit of taking the work out of the equation for you, but be careful about keeping your accounts and identity secured.

 

wellspent money budgeting app
WellSpent is another free app also based on the envelope method of budgeting. Unlike Mvelopes, however, WellSpent does not connect to any of your financial accounts. So, you’ll have to be diligent about entering all of your daily expenses. Once you get into a habit of entering expenses as you go or at a certain time of the day (take a minute to do it while eating lunch or at the end of each day), you’ll find this is an incredibly useful budgeting app. You have the flexibility to add as many envelope categories as you want and track your spending in each category in real-time.

  
Do you use an app for budgeting? If so, do you use one of these or something else? If you do not use a budgeting app, which of these sounds the best to you?

new year's resolution financial check-u

New Year’s Resolution Checkup

new year's resolution financial check-u

 

Did you make a New Year’s resolution for your finances? Now is a good time to check up on how you are doing with those resolutions. If you are still on track, congratulations! If you are struggling to keep your resolution, don’t give up. Evaluate where you are going wrong and resolve to get back on track.

 

According to a study by Fidelity Investments, saving money is the top financial resolution. Everyone has the best of intentions when it comes to saving money. Unfortunately, you need more than a resolution. You need a plan. The Internet is full of creative ways to save money from collecting all your change or five-dollar bills to saving an increasing amount of money each month through the year. These are all a great way to save a little extra, but they all have the same flaw. It’s easy to find a reason each month not to save that money. So, setting up an automatic deposit from your paycheck into a savings account is a much better plan.

 

If you are trying to save money, you need to spend less. Chances are that if you take a good look at where your money goes during the week, you’ll find some easy places to spend less. Keep track of every penny for the next 7-10 days. Then go back and look if your actions match your goals and intentions. Think about all the money you could save if you made your own coffee instead of buying it every day for a year. How much are you spending on meals you are not making at home? Try bringing a lunch to work and finding easy meal solutions for weeknights. You don’t have to be extreme, but utilize coupons, savings apps, and store rewards cards. Do you have a gym membership or fees for other monthly services that you are not using? Can you cut your phone or cable services? Making little changes to your spending habits can add up to big savings over the course of a year.

 

Paying down credit cards and other debt is the second most popular financial resolution. Gather information about the amount owed, payment, and interest rate on all of your debts and make a plan of attack. Credit cards should be your first priority. Rank them based on interest rate or total balance and set out to pay them off one by one. Only after you have done that should you look at other debts. Car loans and other consumer debts should fall into a second tier. If you have no other debt and are already saving and investing, focus on student loans and mortgage debt. Both of these sources of debt usually have very low interest rates, and the interest you pay is a tax deduction.

 

Only about 10% of study participants cited budgeting as a resolution. Yet, making a budget and sticking to it is necessary to finding success with any other financial goal. Make an honest assessment of your income and monthly expenses. Create categories of expenses and set a monthly spending limit for each category. There are some great computer programs and phone apps that will help you record your expenses in different categories so that you can have a real-time picture of how well you are doing sticking to your budget. It really is so much easier to stick to your budget and attain your financial goals when diligently track your progress every month.