You are preparing to send your child to college. Before you help them pack their things, there is one thing you must do.
You need to help them create a budget. You need to teach them how to manage their money so they can learn the tools they will use long after they graduate.
WHY DO COLLEGE STUDENTS NEED A BUDGET?
The truth is that everyone needs a budget. It doesn’t matter how old you are. When dealing with money, a budget is required.
- Allows you to control your money. Instead of your money telling you what to do, you can tell your money where to go. You’re always in control when you’re on a budget.
- It teaches financial skills. A budget helps ensure that expenses like rent, tuition, food, insurance, transportation, and housing are paid for – before you spend money on the fun things. (It also helps ensure that you are not spending more than you deserve.)
- Makes you aware of where your money is going. Using a budget is how you are spending. It is very easy to tell if too much is going towards food when you should be building your savings.
- Helps you pursue your goals. You need to cover the costs, but at the same time you should also work on making savings. With your budget, you can not only see these goals but also track them in real time.
DOES NOT A HOUSEHOLD MEAN YOU CANNOT HAVE FUN?
Not at all! If anything, with your budget you can have fun without guilt.
For example, the budget allows you to spend $ 50 a week on restaurants. That said, you can go out to dinner with friends and enjoy yourself once (possibly twice) a week. You will not be surprised how you are going to get rent now.
WHAT TYPE OF BUDGET SHOULD YOUR STUDENT USE?
There are different methods of budgeting, e.g. B. the 50/30/20 and the zero based budget. For most college students, the zero base is the easiest and easiest to follow.
The reason is that you are chasing everything. They give every penny a job. That is, if you make $ 1,500 for the month that you “spend” the entire $ 1,500.
They will meet the needs (food, shelter, transportation) first and then your needs. If there is any money left over after that, it can be added to your savings.
You can use other types. However, if you’ve never budgeted before, this method is easiest to use.
WHAT SHOULD A COLLEGE STUDENT INCLUDE IN A BUDGET?
The budget varies for each person as the income and expenses are different. However, these are the most common categories to include in a budget:
- rental fee
- Pension insurance
- Car payment
- Car insurance (also saves on annual renewal fees)
- Additional costs (telephone, electricity, gas, water, etc.)
- Entertainment (films, games, concerts)
- to eat out
- Emergency fund savings
Again, you may have items that aren’t included above or you may see some that you don’t need.
But the most important thing is that every penny gets a job. Take into account everything you spend each month so that you never have too much month and too little money.
HOW DO YOU KEEP YOUR BUDGET?
For most students, apps or digital trackers are the best options. However, here are some things to keep in mind before you hurry up and sign up.
- Costs. Many apps are free and work perfectly. A monthly fee is assigned to other apps. If you plan to use one of these, be sure to include this as one of your regular expenses. However, don’t let cost alone be a single factor when you hit the Sign Up button.
- Security. Your safety surpasses everything else. You need to make sure that the app uses both encryption and two-factor authorization.
Some of the best apps are:
- You need a budget (YNAB)
However, your student may also enjoy the traditional paper and pencil method – and that’s fine, too.
Find the right one that works best for your student. Nothing else matters.
TEACHING YOU ABOUT THE HOUSEHOLD
Knowing you need a budget and where to keep track of it is just the beginning. You need to teach your child how to budget.
First, take a look at each category that they need for their budget. You may already know the cost for each category, but if not you may need to call or do research to know.
For example, you know that the rent for the apartment is $ 850 per month, but what is the average utility bills? Ask the manager about these costs so you can budget them.
Next, decide how much you want to allow yourself to spend on groceries. Show them how much a meal costs for a single person at each restaurant that you eat so that they can make an average.
You then have to decide how much “fun money” you want to include as well. You can count on the fact that you want to go to the cinema twice a month, one concert a month, or attend three events.
Now you can see the expenses for your student. Add your income to the budget and subtract expenses. You will see if they are in the black (money left over) or in the red (spending more than they make).
Show them how to adjust the numbers by increasing their savings or decreasing the amount they can spend on clothes – until the budget is zero. Zero means they spend every penny they make.
If you keep them in the loop now, they will stay on track in the future too.