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What's the best way to budget your money in college?

#money #college

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Ana’s Answer

Hi Victoria!

I have the simplest answer for you!


100% - ALL YOUR MONEY

50% - Fixed Costs (as rent, heat, food, medicines, etc)

30% - Anything you want (books, movies, shows..)

20% - Savings (emergency of future investments)


Not a rule, but an excellent model.

Do everything possible not to spend more than stipulated in each category.

Discipline -> Habit -> Success

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Patrick’s Answer

Hi Victoria,


I studied personal finances in college and have found that personal finances are one of the hardest things to control in our lives. A really good plan to use is the 10/70/20 plan its an old simple and effective finacial plan you can use to better control your finances. Here's a brief summary of the plan.


I believe the most important thing people forget to do is to reward themselves. I always believe you must PAY YOURSELF FIRST. What do I mean by that? Every time you earn or receive money put 10% away in a savings account of some kind. It will seem hard at first to take a way thay much away, but you'll realize that your spending doesn't really change all that much and will start to accumulate wealth and savings. The next thing to do is take a look at all you spend money and set realistic goals and limits on what you spend. The key is discipline. If you know you struggle with keeping track of your money, there are a ton of apps you can use or just do the old fashion cash system. DO WHAT WORKS FOR YOU. Ideally you should be living off of 70% of your income. So build a budget to reflect that. Lastly the last 20% is up to your descresion. Save it intentionally for goals, future expenses, or pay any debt you have. I hope this helps you in your college journey. Just know that YOU ARE IN CONTROL.

Patrick recommends the following next steps:

Put 10% away
Create a monthly budget for 70% of your income
Lastly intentionally put 20% away for debt, goals, and future expenses
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Matthew’s Answer

Hey Victoria,


Great question! I've just graduated college at SJSU (San Jose, CA), so I know it can be difficult to be student and save money at the same time.


Firstly, kuddos to you for thinking ahead and wanted to learn more about budgeting. Some steps that are simple and may be helpful for you are:

  1. Determine your (A) Sources of Income and (B) Recurring Expenses on a monthly basis. Once you get an understanding of how much money you are bringing in each month vs. how much you will have to spend on necessities (rent, phone bill, books), then you will have a baseline for how much money you are working with to either spend or save.
  2. For me, I try to save around half of the money left over from spending on necessary items. So half goes to saving and the other half goes to buying food, buying a new piece of clothing, etc.
  3. Set a goal!! Saving can be difficult, but it helps when you have a goal you are working toward. Maybe you want to save for a nice vacation, maybe you have a goal to save $5,000 in one year? Whatever it is, you'll probably want to set a goal for yourself so that you can measure your progress throughout the year. Also, make sure your goal is reasonable, it might not be feasible to save $100,000 in a year, but make sure your goal is reasonable and attainable.

Hopefully this advice helps!


Being in college and saving is tough, but if you put your mind to it, I'm sure you can reach your financial goals.

Matthew recommends the following next steps:

Figure out your income vs. your (necessary) expenses
From step one, try to save half of your money that is left over
Set a goal and continually measure yourself against that goal. Come up with a plan to achieve that goal. Make sure the goal is reasonable and achievable
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Sonia’s Answer

Living within your means. Take care of your priorities first and what is necessary (bills, food, etc.). Then what is remaining after you pay your living expenses, put some aside in your savings (you never know what emergency funds you will need in the future) and after you have set money aside and paid bills - you can use the remainder of your discretionary income to spend on going out, eating out or shopping. If you do not have enough money left over to save or your budget is tight, you can always consider lowering the cost of your bills. Is your rent too expensive? Don't live outside of your means and rent an apartment or home that is too expensive because it is nice. You can make sacrifices early on to help get you further along once out of college. Consider all of your expenses, always, and what you can reduce or eliminate. Some expenses are monthly subscriptions to music apps (spotify, pandora, etc.); streaming services (Netflix, hulu, Disney plus, etc.), and any other expenses you can reduce that allow you to set aside more money for savings and spending. Also, limit credit care use. Only put on your credit card what you are able to pay off in full each month. The worst thing you can do is come out of college with credit card debt and the potential to start off with bad credit. Good credit is everything. Protect it. It is your financial freedom.

Sonia recommends the following next steps:

Reduce current expenses where you can
Cut back on going out to eat, monthly subscription costs, shopping, spontaneous purchases not planned
Create a spreadsheet that tracks your monthly income, expenses, savings and spending (discretionary) money
Create a plan. I find the best plans for saving and budgeting are via excel spreadsheets
Do not assume a lot of debt. Stay away from credit cards and pay them off each month. If you can't pay them off each month, do not use them.
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Matt’s Answer

Simply put, Zero-based budgeting is the easiest way to budget your personal finances. A great tool for this is a free app called Every Dollar
https://www.ramseysolutions.com/ramseyplus/everydollar

This will explain what zero-base budgeting is, how to use it, and how it fits into the big picture of your overall financial goals.
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Fabio’s Answer

First of all plan with an Excel spread sheet.
Revise it every month and discipline, discipline and discipline with expendings.
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Yasemin’s Answer

Hi Victoria! Great question! I think it's important to be aware of what you're spending money on; bills, groceries, and rent are definitely important. If you have a car that also adds to the bill along with insurance. In college I worked three jobs, and I had actually lived nearby to college so I didn't get a car but shared my parents and that helped me greatly! I think the best thing is after your financial aid disburses make sure it covers your college costs and you have money for books and food. I know there are personal needs and times when you want to go out with friends to eat or travel but it's important to keep your money in check and not accrue too much credit card debt. Check out your financial aid office as well, there are many tips to help students with finances; also if you can try work study, it will help you in finding a job on campus allowing for some salary income. Make sure to keep your studies first though, don't take on too much in work for income because it can be difficult to keep up the work.

Best of luck!
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Jaime’s Answer

Hi Victoria, College has a price tag and there are a ton of different discounts. First things first, find and discover your passion and what you really want to do. Choosing a college is quite en endeavor. You should be thinking more on saving ON college more than saving FOR college. Your activity and performance in high school will get you more Grants and Scholarships that you dont have to repay. A 1420 SAT score may get you an 80% tuition discount in many colleges and universities. Admission Directors are struggling to get quality Freshmen to apply . If you have the goods they will give you the education you want and need. See Boston College, Reed College, even MIT and a ton more relatively unknown high quality colleges and universities are looking for you. You just have to “show up” . Know your Estimated Family Contribution and understand your Cost of Attendance and more than anything, avoid borrowing as much as possible. The savings depend a lot on the timeline and horizon you have. And always apply for financing (FAFSA). All the colleges look at that as a thermometer to allocate their available resources. Remember, a 100 additional SAT points may get you more than a 9% rate of return on a 529 Plan or a Roth IRA. Avoid credit cards as much as possible and pay yourself first between 15 and 20% of your income to create an emergency fund. Save first, invest later.

JC

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KJ’s Answer

College was the hardest time to properly budget especially with pressures to live off campus or social activities. But after the first year and having a fall I found that breaking it up into 3 categories

Needs

Extras

Savings

Needs are your bills to keep you going. This doesn't include Netflix, Spotify, or Blueapron. Rent, utilities, transportation, and groceries. Paid via auto pay.

Extras will be everything else. Paid only in cash no exceptions.

Savings having a passive savings app will help you avoid the pitfalls that come along like flat tires. Then transfer them to an online high yield savings account making 2%.

KJ recommends the following next steps:

Go to Mint to organize your spending habits
Check out Qapital for passive savings
Bankrate.com for high yield savings at 2.45%
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