To succeed in college, you’re going to need a plan for everything.
Graduating from college in four years isn’t something that just happens. To make sure you’re walking across the commencement stage in cap and gown by a certain date, you need a plan. And unless you take the time to learn the degree requirements and make specific goals for each semester, you’re liable to miss some steps that could cost you valuable time and resources.
The same is true for your money. Without a written plan for every dollar each month, you’re going to fall into some bad habits that could harm your future. But if you learn to budget today, you can avoid some common college mistakes and start building a strong financial future right away.
Why Budgeting Matters
In college, the days of living on your parents’ dime are over—and the days of taking care of yourself are here. If that sounds exciting, good! But before you get too caught up in dreaming about your new freedom, I want you to realize freedom comes with greater responsibility too.
Living without a budget is pretty common, but it’s costing Americans a lot of money and heartache. According to the 2016 US Bank Possibility Index, 59% of people do not use a detailed budget. No wonder Bankrate found in 2017 that one in four Americans have more credit card debt than money saved in an emergency fund! People, that’s no way to go through life. When you owe more than you own, you’re one big event away from a financial disaster.
Trust me, I can relate to that kind of on-the-edge living myself. When I started living on my own as a young man, I didn’t understand the importance of budgeting. The way I saw it, I was just happy to be working and earning some money of my own. But I didn’t have a clue about how to balance my income and my expenses, much less how to think about long-term financial goals like having an emergency fund or investing for the future. I wasn’t keeping track of how much I had in the bank, who I owed and how much I owed, or when bills were due.
Living without a plan was stressing me out. Fortunately, my dad saw what was happening and jumped in with some wisdom I wish I’d had sooner. He showed me exactly how to create a plan for my income and expenses.
Now, I know for some of you the thought of writing a regular budget sounds like as much fun as an all-nighter cramming for a calculus final. But becoming a budgeter was the best financial decision I ever made. Not only did budgeting take away a lot of stress, but it also helped me move toward financial peace. It may sound funny, but learning to budget was a stepping stone to reaching my dreams.
How to Budget
Now that the why behind budgeting is clear, let’s jump into the how!
Don’t let the word budget distract you from the power of the plan. I like the way author John Maxwell puts it: “A budget is telling your money where to go instead of wondering where it went.”
Writing out a zero-based budget every month is your blueprint for money success. A zero-based budget just means you’re creating a complete plan for all of your spending ahead of time. Think of it as giving every dollar you earn a job to do. When you have the whole monthly plan written out, your total income minus all your expenses should equal zero.
First list all of your income sources for the month. Be sure to include paychecks from work or side jobs, as well as any extra financial support that you receive from family.
Your second step is to list each expense you’re going to have for the month. To give you an idea of what your college expenses might look like, I’ll give some of the basics you must include. But keep in mind you need to list every cost that could require some of your income:
Gas for your car
When listing your expenses, remember that these things change from month to month. The key is to take stock of the things that stay the same over time while thinking ahead about what’s coming up.
Every time you start a new budget, you’re working with two simple elements—your income and your expenses. But as you write down the specifics and work to make them balance, you’re going to be able to take control of your money—and that’s because you now have a plan. But staying in control will only work if you stick to that plan!
Here’s my final tip on budgeting:
Don’t get discouraged if every little thing doesn’t work as planned the first month. That’s totally normal! It might take you a few months, but you will work out the kinks over time. And as you do, I want you to feel the peace and hope that comes from having more than enough to get by.
About the Author: Anthony ONEAL is one of Your Monthly Mentors. Since 2003, Anthony has helped thousands of students make good decisions with their money, relationships and education to live a well-balanced life. Now Anthony has joined Ramsey Solutions to spread this encouraging message to students nationwide as a Ramsey Personality. His youth conferences, concerts and events have drawn enormous crowds, and he’s spoken for some of the biggest names in the industry, including Bishop T.D. Jakes’ MegaFest Youth Ministry, television personality, Judge Glenda Hatchett and Rory Jones. Anthony has also appeared on Fox and Friends, CNN and TBN. Read more and check out Anthony’s other articles…
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