Building a Budget: A Starter Guide For Students
Between studying for exams, working a part-time job, and hanging out with friends, it can be incredibly difficult for a young student to find time to craft a solid budget. But like all aspects of financial literacy, budgeting is one of the most important steps towards creating a stable financial future. So if you're interested in building a solid foundation for the rest of your life and reducing the anxiety your pocketbook may be causing you, read on.
Figuring It Out
The first and most important step towards creating a budget is figuring out your income and your expenses. You should start by reviewing all of your bank or credit card statements and tracking your spending. Find out what you're buying, and how much you're paying for it. Then you can separate these into clearly defined categories, like food, clothes, rent, or utilities. Once you've done this, go through all the categories and figure out what expenses you can, and can't, live without.
Cut It Out, How to Reduce Your Expenses
Obviously, things like your rent and any utilities need to be paid, so you should factor that in as a permanent addition to your budget. But take a look at your food purchases, look at the groceries you bought, then look at things like fast-food orders, pizza deliveries, or visits to a restaurant. You'll notice that a meal you ate at home could cost anywhere from 3-5 times the amount than what you would spend making it at home. That adds up. This doesn't mean you have to completely stop ordering out, but by reducing this type of spending you'll be saving a massive amount of money each month. If you have a roommate, you should try to get them in on this. Next time you go to the grocery store, take a look at the different sizes of meat or cheese. While a one-pound roll of hamburger might be $3.20 per pound, a ten-pound roll can save you up to $0.50 per pound. It's also possible you could qualify for SNAP or other financial benefits.
Take Advantage of Financial Aid
Depending on where you live and your family background you might qualify for financial assistance. So if you haven't already filled out the FAFSA, you absolutely should. The Free Application for Federal Student Aid form is an easy way to find out if you qualify for federal grants or loans, like a Pell Grant. If you are eligible for a grant, unless you fail to meet the criteria like dropping out of school, you won't have to pay it back. You should also take the time to find out if your state is offering any financial aid to students, as this can be another way to bolster your coffers.
Finalizing Your Budget, Make Allowances
Any good budget is always going to include some wiggle room for emergencies. This means you should put away a good portion of your income towards your savings. That way you'll have something to dip into for emergencies or if you have a bad month and fail your budgetary goals. And once you have 3-6 months' worth of expenses saved up, you'll likely want to start investing some of that money into a retirement account.
Your Financial Future
It may seem strange to start saving for retirement before you've even started your career, but starting early is almost always the best option. According to CNBC, more than half of Americans are expecting to have to work part way through their retirement. By starting early and taking advantage of compounding interest, you'll be miles ahead of someone just starting to invest in their 30's. Over at TheStockDork, you can learn about different investing services that have been helping investors like you get started on their investment goals. So if you're interested in learning more about the ins and outs of stock trading or getting into a mutual fund, come check us out.