Creating a Budget for College and Life as a Penn State Student

Creating a budget is an important step to take before your student leaves for school. It is good to find a cooperative atmosphere and keep your student involved when you help them to create a budget. They need to take charge in creating a financial plan but will definitely require the guidance of an experienced veteran in the financial world.

Budgeting your money at collegeThe first step in creating a successful budget

Start by understanding your current financial situation. Ask yourself some questions like how much money do you make? How much money do you spend on a weekly basis, and how much money do you spend on a monthly basis? What kind of bills do you owe and how much money do you have saved? This can actually be one of the most time consuming parts of setting up a personal budget, but it is essential. Work with your student on this step and come up with a lot of questions to help them make their list as complete as possible. Tell them what expenses you will be helping them with, if any, so they can cross them off the list.

Calculate your expenses to make a budgetTrack your spending

The next step will be to actually track and record your spending. Choose a typical month where you will be spending as normal and log every transaction you make. A good way to help with this is to keep all of your receipts and enter them into a budget spreadsheet every day. The resulting log will be an excellent way to pinpoint and eliminate needless spending from your daily activities. You will probably be surprised on how much needless spending you have been doing. A new feature the PSUMoms staff is proud to present to you for the 2011 school year is a budget tracking spreadsheet. This Excel spreadsheet can be customized to your every need and will allow you to track monthly expenditures and compare them to previous months and years! Download your own personal budget spreadsheet

Budget your moneyVisualize progress with your money

The next step in creating a successful budget is to find out where you are going with your money. You already found out where you are, it is now essential to redirect your resources in the direction you want to go. Make some short term adjustments by eliminating wasteful spending from the list of cash expenditures and put that money towards other things. One of the best things you can do with extra money is to pay down debt. If you are carrying a balance on a credit card or have an auto loan, pay it off!

Some easy ways to cut spending are as follows:

Reward yourself for a good budgetBudget Goals and Rewards

The next thing you must have to create a successful budget are both goals and rewards for when you reach those goals. You need to have something to work towards and a way to reward yourself when you reach your destinations. Plan to reward yourself with a night of something you may have previously cut out of your budget. an example of a good goal is comfortably reaching a certain savings level, or paying off a certain debt. Remember, you will need to budget for rewards, so don’t take money away from something else in your budget to splurge with. You will need to constantly revise your goals to make sure they are still relevant in your life. If you pay off your car, obviously you can stop saving for it's payments. If you buy a big screen TV and decide to make payments on a credit card, you will need to make this an addition to the plan.

Work unexpected occurrences into your budget

A staple in any budget is an account for unexpected occurrences. What will you do if all of the sudden you get violently ill and can't work for a few weeks. What If you get injured on the job and disability insurance is only 40% of your normal income. You will need to have an account with funds to make sure you can cover yourself through these times. Set aside some money every month and stay ahead of the game for any unexpected occurances.

Save money at Penn StateTrack your budget's progress

Do you want to have $5,000 saved by the end of this year? Do you want to pay off your credit card bill and put aside enough for a down payment on a car? Sometimes it helps to track your progress visually by writing it down or making a spreadsheet on your computer.

We hope you enjoyed this guide and that it helps you and your student budget properly. If you'd like, talk to other parents about budgeting by creating a profile on the PSU Moms Messageboard.