Creating a Budget
The first step in creating a budget is to sit down and map out both your income and expenses. First identify all your sources of income, including scholarships, loans, money from your parents or summer jobs, and savings. Next you will have to calculate your expenses. Make a list of all your fixed costs, such as tuition, rent, utilities, and phone bills, and when they'll come due. Then factor in infrequent expenses, such as books and course materials. Finally you'll have to consider your regular expenses, such as food and entertainment. It is generally a good idea to keep track of all your expenses for two to four weeks using a student budgeting worksheet or a program like Excel.
After you've calculated all the necessary information, it's time to compare your income and expenses. Add up your total income and subtract your total expenses. Obviously, your expenses shouldn't exceed your income. If they do, look for ways to cut back. Find unnecessary expenses that you can live without, such as eating out and buying new textbooks, and try to cut those down as much as possible.
Needs vs. Wants
Expenses can be broken down into two groups: needs and wants. Things like utility bills, rent, tuition, and food are needs that you cannot avoid. You'll need to factor those things into your budget first. Then you can determine which of your “wants” expenses you can afford to keep and which have to go. Chances are, once you realize how much you're spending on needs, you'll be less tempted to spend money on wants.
