How to save, not starve

It is a universally acknowledged truth that college students don’t have a lot of money. After all, school is expensive, and with limited time to work, those expenses rack up a lot faster than income.

There are plenty of reasons why a college student might choose not to keep a budget. Maybe you don’t know how to get started. Maybe the thought of managing your finances is overwhelming when you’re already behind on schoolwork. Maybe your parents take care of most of your expenses and you don’t feel like you need to keep track of them yourself. Or maybe you meant to take a look at your bank account, but then the new season of Stranger Things came out and, well, we all know how that goes.

No matter what your financial or school situation is, keeping a budget will help you manage your finances and prepare for your future.

“Money isn’t about dollars and cents,” said BYU family finance professor Jeff Hill. “It’s really about being a wise steward for a resource, and we can invest it in things that have value, or we can invest it in things that don’t.”

Hill, along with BYU finance professor Jim Brau, shared some of their budgeting tips for college students.

1. Write down your estimated income and spending.

These estimates can be vague, ballpark guesses. Just write down any source of income you have. This might include job wages, scholarships and grants, student loans or money provided by parents or relatives. Repeat the process with expenses: rent, tuition, textbooks, food, gas, recreation or anything else you spend money on. The categories don’t need to be hyper-specific; throughout the budgeting process, eight to ten categories should suffice.

Brau suggested including every expense, even the ones your parents are paying for. This will give you an idea of what expenses to expect when you become financially independent.

2. Track and compare your actual income and spending.

Keeping track of what you earn and spend is perhaps the most crucial step. Choose a method that works for you, and track your income and expenses over one to three months; you might use a budgeting app, an Excel spreadsheet, or a list on your phone. No matter how you track your money, make sure your method is easy for you to navigate and understand.

Another easy way to track spending is to manage all your expenses with one credit or debit card, Hill said. As soon as you have a good idea of what you’re earning and spending, determine your dispersion, or the difference between what you thought you would spend and what you actually spent. Brau noted that knowing your dispersion is important because it will influence your financial goals and plans.

3. Identify areas where you can cut back on or increase spending.

Both Hill and Brau noted that college students spend a lot of money eating out despite the fact that cooking at home is cheaper and healthier.

Maybe you’re one of these students who eat out frequently. Maybe you’ve noticed you spend a lot on gas, clothing or extravagant outings. It might be wise for you to limit such spending.

On the other hand, you might find other categories where you fall on the other end of the spectrum. Maybe you’ve noticed you spend only five dollars a month on food because all you eat are ramen noodles. Maybe you’ve gone all semester without spending money on anything fun. These might be categories to which you decide to allocate more funds.

The most important thing, Hill said, is to distinguish between needs and wants. Prioritize needs over wants, then allocate funds to wants according to how much they mean to you.

4. Set specific goals for the next month or pay period.

If you’re a member of The Church of Jesus Christ of Latter-day Saints or another congregation which tithes its members, set aside money to pay tithing first. Next, invest in the future if your income allows it. Hill recommended putting 10% of your income into savings. Brau suggested investing in a 401k or Roth IRA as soon as your income can feasibly allow it. Keep in mind that your income might not allow for significant investments until after you graduate.

Next, use your dispersion and the trends you noticed in step three to set specific spending goals in other categories. Look for inexpensive options. For example, if you’re spending a lot of money on gas, try setting a goal to use inexpensive or free public transit options, such as UVX buses or BYU ride sharing. Check out thrift shops before going to expensive boutiques. Explore free recreational activities. Take advantage of coupons, deals and other special offers. Buy store-brand groceries instead of name-brand. If you do eat out, try going out for lunch instead of dinner, and order water rather than over-priced drinks.

When setting spending goals, don’t forget to invest in yourself. Hill recommended that students set aside funds for meaningful recreational activities. If you’ve planned fun expenses into your budget ahead of time, Brau added, you won’t feel guilty about spending that money.

“When you spend money for what you truly value, you claim joy, and when you fritter away your money on things that you don’t really value, you claim frustration,” Hill said.

Brau also noted that budgeting money is only half the battle; you also need to budget your time. If you need competitive grades to succeed in your field, invest time in your schoolwork, even if it means sacrificing some working hours. This may seem counter-intuitive, but the return from your academic success will greatly exceed the money you would be making at your minimum wage student job.

If you need to work during the semester, Brau advised finding a job which allows you to study on the clock, or is relevant to your field and will contribute to your academic experience. If your grades, GRE score or class ranking will have a significant impact on your future career and financial success, you might consider taking out a manageable, subsidized student loan rather than working lots of hours and allowing your schoolwork to suffer. Improving your grades might even earn you scholarships which you can put toward your tuition payments.

5. Review your budget weekly.

Take a few minutes every week to review your expenses and make sure you’re on track for the current month or pay period. If you update your budget every time you receive income or make a purchase, the weekly review won’t be difficult or time-consuming.

Knowing your spending habits eliminates financial surprises. By holding yourself accountable and carefully tracking your spending, you will be able to anticipate many financial emergencies ahead of time and prepare accordingly.

For students wanting to learn more about how to manage their finances, Brau recommended “One for the Money” by Marvin J. Ashton and “Rich on Any Income” by James P. Christensen, Clint Combs and George D. Durrant. Hill said that all students should take his family finance class, SFL 260.

Budgeting doesn’t have to be overwhelming. With the right tools and the right steps, any college student can manage their money while still planning for the future, eating healthy, and having fun.