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How to Make and Manage a Budget
November 24, 2020
It’s holiday time! The festive season may mean you are spending more than usual on gifts for your loved ones, or you may be gifted some cash, or perhaps both. Maintaining control of your finances can be especially challenging during this season, but keeping track of expenses and balancing accounts are important practices to sustain beyond the winter months.
If you have been anxious about having enough money to support yourself while in college, you are far from being alone. According to a 2014 National Student Financial Wellness Study, 76 percent of two-year institution students reported feeling stressed about their personal finances. Research has also shown that financial stress can lead to a negative impact on mental health as well as academic performance. As you are wrapping up this year and preparing for the next, consider ways you can improve your spending and saving habits to gain peace of mind and earn better grades. Here are some tips and tools to get you started!
Identify how much money you have to spend.
Make sure you understand what funds you have available. What is the balance in your checking account? Do you have any savings? What is your expected monthly income? Is this consistent, or does it fluctuate?
If you are receiving outside financial support, such as from your parents or family, have an open conversation about how much and how long they will provide for you. Do you need to maintain a certain GPA? Is there a cutoff point? Make sure you understand any expectations so that you aren’t surprised by any sudden changes in financial support.
Determine how much you need to spend.
Just because you have money doesn’t mean you should spend every penny. What are your essential expenses? This may include food, rent and utilities, car insurance, a phone bill – anything you must cover in order to sustain a living. Be strict about distinguishing between needs and wants, and cut out anything that is not absolutely necessary as you are building out your initial budget. This online monthly planner will automatically calculate your expected spending and compare it to the popular 50/30/20 principle (designating 50% of your income to needs, 30% to wants and 20% to savings/debts).
Keep in mind that different times of the year may have different demands; for example, the beginning of a semester will have the additional cost of a fresh set of textbooks. Remember, TN Promise will only cover tuition and mandatory fees!
Set specific financial goals.
Defining your financial goals will help you make better financial decisions. It becomes easier to say no to an impulse buy when you know that doing so will contribute to a higher priority. Goals will be unique from person to person, so take time to think about what you value and want to achieve. Be specific and realistic when settling on a target savings amount and timeline (i.e. $3,000 for a down payment on a vehicle by next August). Remember to evaluate your progress on a regular basis and make adjustments as needed to remain aligned with your goals.
The idea of creating a budget can be daunting, especially if it is something you’ve never done before. It does require a bit of effort on the front end, but it will pay off (literally!) if you stick with it. Try using an app like Mint or PocketGuard to record your purchases and reflect weekly on what you need to do to stay – or get back – on track. Because money management is a critical life skill for everyone, there are plenty of budgeting resources and tricks available. All of us at tnAchieves want you to be successful through college and beyond, so if you need help in this area, do not hesitate to reach out to our staff!