Budgeting is a vital practice for everyone, but especially college students. The exciting sense of freedom that college brings often extends to students' finances as well. Many college students are just beginning to prioritize their future and set financial goals for themselves.
Read on for a step-by-step guide for college students on how to make your own monthly budget!
This is a step-by-step guide on how to determine and fill out your monthly budget! Before getting started you will need to download and print your monthly budget template.
While that’s printing, read on to learn about the different kinds of expenses and how they will impact your budget.
What are the types of expenses?
Personal finance expenses can be separated into two main categories: essential expenses and non-essential expenses. An essential expense is an expense that is required for living, while non-essential expenses are not. It is important to be able to identify the difference between essential and non-essential expenses when creating your budget.
Essential expenses can be broken down into two categories, fixed and variable expenses. Both types of expenses are crucial when it comes to developing a budget that works for you!
A Fixed Expense is a recurring cost of which the amount never changes. These expenses are easily identifiable because you pay these expenses regularly (Weekly, monthly, quarterly, or yearly). Some examples of common fixed expenses are rent, insurance, leases, subscriptions, and car payments. Although, fixed expenses could be anything from credit card debt and bills to student loans.
A Variable Expense is a potential cost that varies each month depending on your personal spending decisions. Examples of a variable expense include gasoline, car maintenance, groceries, phone bill, and so on.
Non-essential expenses are the things you spend money on but don’t need. These expenses are often where the most money is wasted in a budget. This category includes purchases such as clothing, games, movies, dining out, gifts, and other unnecessary purchases. Although, some of these can be considered essential in moderation.
So, you’ve learned about the different kinds of expenses, you’re ready to continue! There is one thing you need to do before you begin filling out your budget, figure out your average monthly income. To do this, you are going to compare your income over the last three months and come up with an average. Be sure to include any part-time job or regular pay into your income, it’s important to keep track of everything!
On a piece of paper, write down your monthly income for the last three months. Add them all together and then divide by three. This gives you your average monthly income!
Now that you have calculated your average monthly income, it is time to start filling out your budget sheet. Before we begin, make sure that you have your budget sheet, a pencil, and an extra sheet of paper ready. Follow along through the steps while filling in your own budget, you got this!
Step One: Income
The most important information needed in order to create your budget is your income. Without knowing your income, it would be very difficult to create a budget that best fits your individual needs. We already had you calculate your average monthly income above. Now, write in your average monthly income on the "Income" line on your budget sheet!
Step Two: Fixed Expenses
Now that you have recorded your monthly income it is time to look over your fixed expenses. Double check the fixed expenses that we already listed apply to you, if not you can cross them off. Feel free to add any expenses we missed in the “other:” row as well.
As a college student, it is important to think of the future, especially financially. A fixed expense can also be for a savings account. If you’re a college student who is taking on student loans such as financial aid, tuition, and fees, consider beginning to save money now.
Step Three: Fixed Expenses Cost
The next step is to calculate and write down the cost of your fixed expenses. Remember, fixed expenses are costs that stay the same, so little to no calculation should be needed. In the boxes provided under the “Amount” column, write in the monthly cost of your fixed expenses.
Step Four: Total Fixed Expenses Cost
The fourth step in creating your budget is to add the cost of your fixed expenses together and write in the yellow square next to “F.E. Total”. Be sure to double check your work and make sure you added correctly!
Step Five: Amount Remaining
The next step is to calculate the amount remaining after Fixed Expenses. To find the amount remaining, you subtract your F.E. Total from your Income. Write the answer on the Amount Remaining line.
Step Six: Variable Expenses
Now it’s time for variable expenses. Using a separate sheet of paper, make a list of your variable expenses and estimate how much you would spend on them monthly. Try and keep the list as short as possible by condensing some expenses into a broader topic.
Step Seven: Variable Expenses Cost
For step seven, estimate the monthly cost of each variable expense and write the prices in the “Cost” column. If you have variable expenses that are not labeled on the sheet you can include their price in the “Miscellaneous” cost row.
Step Eight: Total Variable Expenses Cost
The next step is to add together the costs of your Variable Expenses. Once you have done that, write your answer in the space provided next to “V.E. Total”.
Step Nine: Calculate Total Expenses
Now that you have successfully calculated both your fixed and variable expenses, your next step is to find the sum. To do this, add together the “F.E. Total” and “V.E. Total” amounts and write your answer in the provided space next to “Total Expenses”.
Step Ten: Total Savings
The final step in building your budget is to find your total savings. To do this, subtract the final total expenses from your original total income. Once you’ve done that, record your answer in the yellow box next to “Total Savings”.
Although it is up to you what you do with your total savings, we recommend putting the remaining money into your savings account or an emergency fund. You never know what the school year might hold, and it never hurts to have some money saved up in case any unexpected college costs come up.
Congratulations! You have successfully followed along and completed your personal monthly budget. Filling out and following a budget sheet every month will help keep your bank accounts and finances in check. We hope that this step-by-step guide has helped you build your college budget and save money!
Can we guess your zodiac sign based on your budgeting habits? Check out our quiz!
Or check out 6 Tips for Budgeting Your Money in College for more helpful tips on managing money!