Writing a budget - College Edition

So, you're off on your own in college now. If you're like most people, your funds are quite limited, but you probably haven't had to write a real budget before. Chances are that up until now, if you got yourself into a tight financial corner, your parents would be there to bail you out. Now that you're an adult, though, you don't want to ask your parents to do this even if you know they will. It's time to grow up, and it's time to work with a budget.

Budgeting can sound a little scary, but if you follow a few easy steps, it isn't terribly hard. These steps will ease you into the whole budgeting process so that by the time the year is over, you will be totally in control of your money.

First, take stock of where your money is actually going. The first step to making a budget isn't actually writing down what you will spend but figuring out what you do spend. For the next two weeks, write down every penny that you spend, and also write down where you spent the money and what you spent it on. The more specific you are, the better.

Second, figure out what you can spend. If you've been charging your spending to a credit card, it's time to stop! That $200 now could end up costing you another $200 in interest by the time you pay it off. If you have a part-time job, a work-study job, or a certain allowance of money from your parents, figure out what you have to spend on a monthly basis. If you're never sure what kind of hours or tips you'll get, it's best to undershoot your average a little. Then if you have extra money one month, it can be a bonus for fun spending.

Third, start your budget with the big things. The easiest way to fill a jar with rocks, pebbles, and sand is to start with the biggest rocks first. The same thing goes with your budget. You should be worried about major expenses like health insurance, your car payment and car insurance, tuition, and books. Write those down first, and then see what's left over each month. From that, work on the pebbles - your groceries, gas, and other spending that is necessary but variable. Finally, you can pack in whatever sand you can still fit into your spending limits - eating out, random shopping trips, and maybe a little bit of savings.

Fourth, decide how you'll work your budget. You can write checks for the big stuff or pay it online. For the smaller things, use a debit card only if you can keep your checking account balanced. If this gives you problems, withdraw cash and use an envelope system with an envelope for every piece of your budget. If you run out of cash in one envelope, then that budget is shot until the next month.

Finally, be sure that you tweak your budget as you need to. This is what many people forget to do. If the original budget isn't working for you, then start looking at what you can change. Maybe going on a school meal plan next semester will save you money on food, or maybe you just need to say "no" to Eating with friends more often. In addition, we want to fill in the budget, if your income or change their major expense.