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Balancing Budgets as a Self-Sufficient Student
by Rae Steinbach
Although learn a lot of things in school, it’s common for young people to be unfamiliar with many important life skills. In fact, most people in the United States are in need of improved financial literacy, and it starts with simple skills like budgeting.
Budgeting is an important part of financial literacy and can help you learn how to manage your money responsibly. You’ll be more conscious of the benefits of things like making your coffee at home and finding a low cost renters insurance plan.
Paying attention to your finances has many benefits. Most importantly, you’ll be able to keep track of expenses and income over time with a little work. The following five points are some quick, easy steps to creating your first budget.
- Budget for a specific time frame
Many students face different employment responsibilities at different times of the year. Therefore, it may make sense for you to start budgeting at the beginning of such a transition. Consider a break, for example, or the start of a new semester. Once you start working full-time, you may decide to transition into a monthly budget.
- Determine your income
The most important part of budgeting is having an accurate idea of how much money you can expect to have. For that reason, it’s better to estimate too low than too high.
It’s great if you have extra money left over, but overestimating your earnings can be a serious problem. It’s not uncommon for students to have unpredictable incomes due to erratic work hours and tips, so always be conservative in your estimation.
- Determine your expenses
It can be difficult to know exactly what you’re spending on a monthly basis, so you should start with the obvious: rent, tuition, food, and other fixed expenses. You can also look at your bank statements to see how much you’ve spent in the past. Doing so will help you identify ways in which you can cut down on unnecessary expenses.
- Find ways to save
Most young people aren’t as cognizant of the need to save, but it’s one of the main benefits of budgeting. You should try to save roughly 20% of your income, with 50% going to necessities, and the remaining 30% being used for discretionary spending. You might not see the need for this now, but it can help pay for emergencies or large expenses later in life.
- Balance your budget
By now, even though you’ve recognized your spending habits and started budgeting, your work means nothing if you can’t stick to it. A balanced budget has more incoming money than expenditures , even including savings. Luckily, there are a number of mobile apps and other programs designed to make this as easy as possible.
Budgeting is a complicated process, especially at the beginning. However, these simple steps will help you create a budget that works for your unique circumstances. The skills you gain from creating your first budget and sticking to it will help you throughout life, so there’s no reason to wait!The skills you gain from creating your first budget and sticking to it will help you throughout life, so there’s no reason to wait! Click To Tweet
Rae is a graduate of Tufts University with a combined International Relations and Chinese degree. After spending time living and working abroad in China, she returned to NYC to pursue her career and continue curating quality content. Rae is passionate about travel, food, and writing, of course.
Twitter handle: @araesininthesun