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How Should Students Pay for Monthly Expenses?

Finances
Written by Safa Hijazi
Updated: June 12, 2024
11 min read
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The opinions expressed in this article are the author's own and do not reflect the view of Pathward®.

Being a college student can be a challenging and financially demanding time in your life. With tuition fees, textbooks, and living expenses to consider, managing your monthly expenses becomes a crucial skill to develop. In this Bold.org article, we will explore some strategies to help you effectively manage your finances and make your student years more financially comfortable.

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Your Financial Situation

Before diving into budgeting and saving strategies, it's important to have a clear understanding of your financial situation. Assessing your income and expenses is the first step towards creating a balanced budget.

Understanding your financial situation is not just about knowing how much money you have coming in and going out. It's also about understanding your financial goals, priorities, and values. By taking the time to assess your financial situation, you can gain a better understanding of where you stand financially and make informed decisions about your money.

The Importance of Budgeting

Creating a budget allows you to track your income and expenses, helping you identify areas where you can save money. According to a survey conducted by the National Student Money Survey, 79% of students who budgeted their finances felt more in control of their money.

But budgeting is not just about restricting your spending. It's about setting financial goals and making intentional choices about how you allocate your money. By creating a budget, you can prioritize your spending and make sure your money is going toward the things that matter most to you.

Another benefit of budgeting is that it can help you prepare for unexpected expenses. By setting aside money for emergencies or unexpected events, you can avoid going into debt or relying on credit cards to cover unexpected costs.

Identifying Your Income Sources

Take note of all your income sources, such as part-time jobs, scholarships, or financial support from your family. Understanding the amount and frequency of your income will help you plan your expenses accordingly. With that, you can find your average monthly income.

It's also important to consider the stability and reliability of your income sources. For example, if you have a part-time job, is it a consistent source of income, or does it fluctuate from month to month? Knowing the stability of your income can help you make more accurate financial projections and plan for any potential income fluctuations.

In addition to your regular income sources, it's also important to consider any additional sources of income you may have. This could include things like freelance work, rental income, or investment returns. By identifying all your income sources, you can create a college budget that makes sense for you.

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Creating a Realistic Monthly Budget

Now that you have a clear picture of your finances, it's time to create a practical college budget that aligns with your income and priorities.

Creating a budget is an essential step in managing your finances effectively. It allows you to take control of your money and make informed decisions about how you spend and save. By creating a realistic monthly budget, you can ensure that you are living within your means and working towards your financial goals.

Listing Your Fixed Expenses

Start by listing your fixed expenses, which are regular and predictable. These may include rent, utilities, and transportation costs. Knowing these fixed costs will allow you to allocate the remaining funds for other expenses.

Fixed expenses are the backbone of your budget. They are the expenses that you have to pay every month, regardless of any other factors. By listing them out, you can see exactly how much money is going towards these essential costs and plan accordingly.

When listing your fixed expenses, it's important to be thorough and include all the necessary costs. This includes not only your rent or mortgage payment but also any homeowners association fees, property taxes, or insurance premiums. Similarly, when considering transportation costs, don't forget to include not just your car payment but also gas, maintenance, and insurance.

Estimating Variable Expenses

Variable expenses, such as groceries, entertainment, and personal care items, can fluctuate from month to month. It's helpful to estimate these costs based on past spending patterns or by tracking your expenses for a few months. By having a rough estimate, you can plan and adjust your budget accordingly.

Variable expenses can vary from month to month, depending on your needs and preferences. These expenses can be a bit trickier to budget for since they are not as predictable as fixed expenses. However, by estimating these costs based on your past spending habits or by tracking your expenses for a few months, you can get a better idea of how much you typically spend in these categories.

When estimating variable expenses, it's important to be realistic and consider all the different factors that can influence your spending. For example, if you know that you have a special event or vacation coming up, you may need to budget more for entertainment or travel expenses during that particular month.

Additionally, it's a good idea to build a buffer fund for unexpected expenses. Life is full of surprises, and having some extra money set aside can help you deal with any unforeseen circumstances without derailing your entire budget.

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Saving Strategies for Students

While managing your monthly expenses is essential, it's equally important to save money for future goals and emergencies. Saving money as a student can be challenging, but with the right strategies, it's definitely achievable. In this article, we will explore some effective ways to save money and build a solid financial foundation for your future.

Reducing Non-Essential Spending

Identify areas where you can cut back on non-essential spending. For example, reducing eating out or finding more affordable alternatives for entertainment can make a significant difference in your monthly budget. According to the Personal Finance Survey, 83% of students who reduced their discretionary spending were able to save more money.

One way to reduce non-essential spending is by creating a budget. Start by tracking your expenses for a month and categorizing them into essential and non-essential. This will give you a clear picture of where your money is going and help you identify areas where you can cut back. For instance, you might realize that you're spending a significant amount on daily coffee runs or impulse purchases. By cutting back on these expenses, you can save a substantial amount of money each month.

Another effective strategy is to find cheaper alternatives for your everyday needs. For instance, instead of eating out at expensive restaurants, you can try cooking at home or packing your lunch. Not only will this save you money, but it can also be a healthier option. Similarly, instead of going to the movies, you can opt for movie nights at home with friends or take advantage of student discounts at local theaters.

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Making Use of Student Discounts

As a student, you have access to various discounts and benefits that can help you save money. Whether it's discounted transportation, software, or entertainment, take advantage of these offers to stretch your budget further.

One of the most common student discounts is on transportation. Many cities offer discounted or free public transportation passes for students. By using public transportation instead of owning a car or taking taxis, you can save a significant amount of money on gas, parking fees, and maintenance costs.

In addition to transportation, many software companies offer student discounts on their products. Whether you need design software, productivity tools, or even antivirus programs, check if there are any student discounts available. These discounts can save you a substantial amount of money, especially if you need to purchase software for your studies or personal projects.

Entertainment is another area where you can make the most of student discounts. Many theaters, museums, amusement parks, and even online streaming services offer discounted rates for students. Make sure to carry your student ID with you and inquire about any available discounts before purchasing tickets or subscriptions.

managing student loan debt

Managing Student Loans and Debt

For many students, loans and debt are a reality. Managing them effectively can help minimize financial stress in the long run.

When it comes to student loans, it's important to be proactive in understanding your options and planning for repayment. Taking the time to thoroughly understand the terms and conditions of your loans will empower you to make informed decisions about your finances.

Understanding Your Loan Repayment Options

One of the first steps in managing your student loans is understanding the repayment options available to you after graduation. There are several different plans to choose from, including standard repayment, income-driven repayment, and extended repayment. Each option has its own advantages and considerations, so it's crucial to research and compare them to find the best fit for your financial situation.

Standard repayment is the most common option, where you make fixed monthly payments over a set period of time. This plan is ideal for those who can comfortably afford the monthly payments and want to pay off their loans as quickly as possible.

Income-driven repayment plans, on the other hand, adjust your monthly payments based on your income and family size. These plans can be particularly beneficial for borrowers with lower incomes, as they ensure that loan payments remain affordable. It's important to note that income-driven plans typically extend the repayment period, resulting in more interest paid over time.

Extended repayment plans, as the name suggests, extend the repayment period beyond the standard 10-year term. This can be helpful if you need lower monthly payments, but keep in mind that it will also result in more interest paid over the life of the loan.

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Tips for Minimizing Student Debt

While managing your student loans is important, it's equally crucial to take steps to minimize your debt in the first place. Here are some tips to consider:

1. Borrow only what you need: It can be tempting to take out the maximum loan amount offered to you, but remember that every dollar you borrow will need to be repaid with interest. Carefully evaluate your expenses and borrow only what is necessary to cover your education costs.

2. Explore scholarship and grant opportunities: Scholarships and grants are excellent sources of free money for college. Take the time to research and apply for as many scholarships and grants as possible. This can significantly reduce your need for loans and help you graduate with less debt.

3. Keep track of your expenses: It's important to have a clear understanding of where your money is going. Create a budget and track your expenses to identify areas where you can cut back and save. By being mindful of your spending habits, you can avoid unnecessary debt and make smarter financial decisions.

4. Make timely payments: Late or missed payments can result in additional fees and damage your credit score. Set up automatic payments or reminders to ensure that you never miss a payment. By making timely payments, you'll not only avoid unnecessary charges but also build a positive credit history.

5. Consider part-time work or internships: Taking on part-time work or internships while in school can help offset your expenses and reduce your reliance on loans. Not only will you earn money to cover some of your costs, but you'll also gain valuable work experience that can enhance your resume and future earning potential.

Building Healthy Financial Habits

Managing your monthly expenses is just the beginning. Developing healthy financial habits can set you up for long-term financial success.

When it comes to building healthy financial habits, one important aspect to consider is the role of emergency funds. Having an emergency fund is a crucial part of any financial plan. It acts as a safety net, providing you with a financial cushion in case of unexpected events. Aim to save a portion of your income regularly to contribute to your emergency fund. 

A general rule of thumb is to have three to six months' worth of living expenses set aside. This way, you can be prepared for any unforeseen circumstances, such as medical emergencies, car repairs, or sudden job loss.

In addition to emergency funds, regular financial check-ins are also essential in developing healthy financial habits. Make it a habit to review your budget and financial goals regularly. By checking in on your progress, you can make adjustments if needed and stay on top of your financial situation. 

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Frequently Asked Questions About How to Pay for Monthly Expenses

How do you stay consistent with healthy financial habits?

You can start developing healthy financial habits by being mindful of your financial goals. Whether it's saving for a down payment on a house, paying off student loans, or planning for retirement, having clear financial goals can help you stay motivated and focused on your long-term financial success.

It is important to understand that building healthy financial habits is a continuous process. It requires discipline and commitment. It's not just about managing your monthly expenses but also about making conscious decisions about your spending habits and financial priorities.

Who can I talk to about student loans?

Student loans are different for every student, so talking to your financial aid office can be helpful to fully understand the loans you are offered and how repayment may look for you. You can also talk to your financial aid office to cancel loans you don't need or even ask for more financial aid! You can also speak to third-party student loan counselors as well.

What are the best debit or credit cards for students?

Cards that are designed for students usually have some sort of cashback rewards system that is beneficial for students. You should look for a card with no annual or extra fees to keep your costs low as well. Find a card that fits well with the budget that you've created. There are many different cards on the market designed for students. Join the waitlist for the new Bold Debit Card today!

To read more Bold articles and apply for exclusive scholarships, make a free Bold.org profile today!

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Safa Hijazi

About Safa

Safa is a great writer and researcher. She brings a unique blend of creativity and analytical skills to our writing team, honed through her diverse experiences in both literary and media fields.

Safa is an undergraduate student at the University of Michigan majoring in English and Creative Writing with a minor in User Experience Design.

Experience

Safa has always loved writing and reading. She loves to write poetry and informational articles. She was an English summer intern at Michigan News where she assisted in planning, researching, and writing news articles. With the knowledge she gained at this internship, she became a skilled article writer. 

She now works for Michigan News as a media assistant, focusing on graphics and social media writing. Safa’s poetry collection, “Let Us Get Lost in the Valleys,” was a first-place winner of the Hopwood program's Keith Taylor Award for Excellence in Poetry by the University of Michigan in 2023. She also won the Seham Elasmar Memorial Scholarship for writing and media from the Islamic Scholarship Fund to support her English education. Safa's experience and passion for writing allow her to provide students with valuable information and insights.

Safa is no longer with the Bold.org Writing Team, but we continue to value and appreciate her contributions.

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