Going to college means more freedom, along with increased responsibility, which includes having more control of your finances. Creating and sticking to a budget is the ideal way to develop healthy financial habits.
A great place to start is simply by tracking your daily and monthly expenses during your first semester at LCU. Developing the discipline to follow that budget over the long haul builds the foundation for a healthy financial future.
Why is a Budget Important?
Financial independence can be difficult during the first year of college, when many students are prone to overspending. If you haven’t done it before, budgeting can be a challenge, but establishing a budget is crucial. A 2013 survey showed that U.S. college graduates left school with an average student loan and credit card debt of $35,200 (). Many of those students said they would handle their finances very differently if they had the chance to do it over again.
Start With an Overview
It’s important to ask yourself what expenses are necessary before you begin your first semester. You’ll likely find that there are some expenses you could, and perhaps should avoid, i.e., do you pay for Netflix, Hulu, and Spotify? Do you eat off campus a lot, and that’s part of the reason you’re spending more than you earn? As a general rule, your monthly income consists of how much loan money you’ve accepted, scholarships and grants, and how much money you make in your part-time job or work-study.
Things to Remember When Starting a Budget
A budget not only allows you to manage your money, but also gives you peace of mind that you are prepared for potential emergencies and unplanned large expenses.
College in Colorado shared an article where they outline some tips to consider in the budget planning process. The key takeaways are to set goals, track your expenses, build a budget based on real spending habits, and to be honest with yourself.
We would like to emphasize being realistic and budgeting to have fun. Keeping these two ideas on the radar as a budget is planned can dramatically increase the likelihood that it will be reliable and useful.
Other Things to Remember
There are others things to keep in mind as you plan a budget and take responsibility for your finances.
- The financial decisions you make now will impact you long-term. While student loan money may seem like “free” money, every cent of it must be paid back. Don’t let excessive student loan debt hamper you financially for several years after you leave college.
- Don’t assume that money management and budgeting are optional. If you learn to control your money now, you’ll be more financially secure in the future.
Prepare your budget now and you’ll be proud of your financial decisions when you walk across the stage at graduation! Get started by working with the LCU Financial Assistance Team to talk further about any money management questions you have.