Budget planning might be tricky for students entering their colleges or universities for the first time. From planning to spend on new books and stationery to spending on good food, almost all the students find it hard to manoeuvre around their financial limits and expenses. Balancing the cost of housing, rent, electricity bills, clothes, and such essential things becomes difficult when you are in a cash-strapped situation. Planning your budget not only ensures sufficient expenditure on each of your services but also provides you with an approach to organise and maintain your finances.
Anya Ilkys, Director of Student Financial Literacy in Centre for Financial Independence at the Northeastern University, gives an insight into some of the useful tips to practise while budget planning.
1. Mapping the sources of cash flow:
Sources of cash flow may be paycheck from a job or a set of odd jobs or internships, money from family, savings, a financial aid refund, etc. It is important to understand the source because it will eventually help in limiting your expenses.
2. Setting up financial goals:
Ilkys recommended having short-term, medium-term, and long-term financial goals. The short-term goals should be attainable in one to two years; medium-term goals in two to three years; and long-term goals in four to five years. This will help in figuring out where you want to put your money and where does it rank on your list of priorities.
3. Be flexible but have control:
It is important that while planning a budget you should also leave some space for having fun. Because it is important that you treat yourself. However, this should be done without breaking your monetary barriers or else you’ll end up in debt or will have difficulty in managing for the next month’s finances.
There is a lot of temptation to buy or spend but you have limited expenditure facilities. Therefore, budget planning requires a lot of discipline on part of the student.