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Understanding Your Budget During and Immediately Following College

Understanding Your Budget During and Immediately Following College

As you prepare for and begin your journey as a college student it is important to learn how to manage your money well. College is often synonymous with being broke but even if you have little money to manage, a budget is more about the creation of healthy habits than it is about watching the dollar in the moment. Making the effort to avoid unpleasant financial surprises at the end of this experience by operating with the guidance of a budget is worth it. Specifically, if you are a student that has taken out loans to pay for your education, you will want to have the practice of budget-based living under your belt so that you do not feel completely captivated by your loan payments once you graduate. 

Invest in Knowledge

You might be familiar with the terms of your student loans on the front end, but have you considered getting ahead of the game and learning about how to live with them on the back end? While you are in college, student loans can feel insignificant because you have already done the work to apply for and acquire them in order to enroll, and you are not yet a graduate faced with the start of repayment. One way to not take a position of complacency is realizing that you can research what borrowers need to know about taking out a student loan consolidation to combine existing education obligations into one payment. Doing this while you are still a student gives you an opportunity to play around with numbers, knowing they will slightly fluctuate, and as graduation inches closer and begin to consider how your student debt will impact your budget. 

Just as there are categories of your budget that will appear after graduation, there are categories from student life that will go away. Gathering and understanding your money details is the first step in creating a budget for each stage. Take a realistic approach to this step. Being honest with the demands of your circumstances will prevent you from misappropriating your funds, a mistake that as it relates to your student debt, can have lasting consequences. 

Be Flexible and Frequent

Budgets must be the perfect combination of fixed and fluid. Meaning, determine which elements are non-negotiable and which can be manipulated. While in college, factors like housing, and transportation are likely fixed, once things like leasing agreements are signed, rent costs cannot change from month to month. On the contrary, a category like groceries, might have more bend. This does not mean that you do not have to stick to your perimeters though. This means that you need to evaluate and assess your budget frequently enough to identify areas that require change to best suit your overall goal.

Once you graduate, it is expected that your budget will have to graduate as well. The circumstances of your life look different in many ways after your leave college, and your budget needs to support that. Specifically, in refence to your student loans. That repayment period is coming regardless of if you have found a job yet, where you live, and the monthly cost of your car lease. Build a budget with the largest fixed categories first. Since you have probably not looked at your student loans in several years, take note of how they can potentially be reworked to suit you better. With interest rates constantly changing, you might consider refinancing and consolidating to create a more manageable monthly payment for yourself. The bottom line is, it is important to understand the hierarchy of a budget and where you must be conservative to build a healthy relationship with your personal finances. 

Track Your Spending

Having a plan in place is great, but if you improperly execute it, what is the point? Tracking what you spend is very closely related to building and maintaining a budget. Being able to examine your personal finances in detail is the most efficient way to learn which of your habits support your goals, and which do not. Tracking spending can help you identify areas where you have budgeted too much or too little. This is more supporting evidence for why your collegiate budget cannot be copy/pasted into your life post-graduation. 

For example, your food budget in college is likely indicative of a lifestyle where you had to fully fund your meals on your own. After you graduate, if you move back home for example, that category could possibly be eliminated. The introduction of finance forward apps makes tracking spending, and budgeting in general, easier than ever so there is no reason not to take advantage and get yourself comfortable managing your current finances to build the habits necessary to successfully manage your future ones as well.  

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