Get a grip on your budget --learn to spend smart and live better

By Morgan Timoney

March 4, 2004 | Living on a small budget in college can be difficult and sometimes frustrating. Whether it's financial aid, a part-time job, or an allowance from mom and dad, it is challenging to do what we want on a next-to-nothing budget.

Planning a budget month by month can solve most of the financial barriers you are having problems with. It sounds so simple, yet so many students have problems with money management.

I have had to learn the hard way, and thanks to hindsight, I now know where my financial problems exist. I was charging way too much to my credit card, and a large portion of my charges went to wants rather than needs. Eating at restaurants and fast-food places all the time drained the money in my account, and many times offered very little nutrition. Buying groceries is a cheaper and much healthier food plan.

I had a hard time understanding that eventually I would have to pay for all the things I was charging. Needless to say, I cut my Visa up to stop me from spending the money I did not have. It was a very sad day.

Why should you care about creating a budget? Putting together a budget is vital if you don't want to spend your way into serious problems. Overspending is a developing habit that will follow you throughout your life.

"I can only work part-time because I am a full-time college student. I have to stay on a low budget because I am responsible for paying my bills on my small income," said Natalie Wood, a junior at Utah State University studying business information systems.

Wood, like many other college students, has to work a part-time job for all her expenditures. Although her parents help her when she is in need, she is responsible for paying her bills and supplying her own "play" money.

"All of my bills are due at the end of the month and I get paid once a month at the beginning. I have to make a conscious effort to pay all my bills early so I am not left without any money when my bills are due," said Wood. "I have realized the importance of paying bills by the due date because credit card companies don't care, and it ends up costing more in the long run."

Wood has learned many different steps in saving money and planning a budget for herself each month. "It is much more cost effective to buy groceries and cook at home than eat out. I realized that is where a large portion of money was going," said Wood. "Balance your checkbook, do not guesstimate."

Moneycentral recommends grocery shopping to cut costs. Basic groceries should cost a single person about $150 a month. It is more expensive to eat out. Eliminate food costs by bringing lunch and snacks from home. Replace potlucks or picnics for socializing at restaurants. Save coupons and learn to make healthy meals in the convenience of your home.

Cara Jones, a senior at USU and a public relations major said, "I promised myself I would only use my credit card for emergencies, but I started to tell myself that the new pair of strappy black sandals to go with my favorite dress were definitely an emergency." Jones has learned the difficulty with having a credit card and using it only when necessary.

"Before I knew it, all my expensive wants, that I insisted were needs, turned into a very large credit card bill," said Jones. "Being a student on a limited income forced me to make some changes. I started with simple things such as eliminating highlighting my hair. It was an expensive habit and I don't mind the way my hair looks without it."

By separating needs from wants, it is easy to eliminate costs. Rather than paying for cable, switch to basic. Search for a cheaper cell phone plan and learn to talk when minutes are free. Conserve energy by turning your heat down and using only the necessary lights in the house.

Moneycentral also suggests that doubling the monthly minimum payments on a credit card can eliminate debt in less than three years. You could be repaying today's purchases over the next 30 years with the way credit card companies calculate the minimum payments.

"I think college students are often flippant about their finances and credit, which is probably the main problem I see," said Patti Timoney, assistant vice president and manager at a Wells Fargo store. "Many college students are in inexperienced and uneducated as to budgeting disciplines."

Betterbudgeting proposes an easy budgeting plan for students to follow. List all the money you owe. List all the expenses you expect and list the income you expect. Make a budget based on that information. Find a way to save; it helps to have a rainy day budget or an emergency fund.

"Most young adults do not understand the impact that their financial activities will have on their ability to establish loans, credit cards and often checking accounts in the future," said Timoney. "Credit is available at a very young age. Credit card companies send unsolicited offers through the mail in multitudes. While they are not bad products, there is no education offered by these companies regarding prudent use of credit."

By creating a budget and following a few key guidelines you will look back and realize how important it was to start out right. You only have one chance; doing it right the first time is essential. Through smart spending, you can live rich on a shoestring budget.

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