Financial goals and budgeting for students

Managing your money may feel overwhelming as a college-bound high school student or if you're already in college. Learning financial skills, like how to budget can help you make better financial choices to reduce stress and achieve your goals. It also prepares you for financial independence and for adult responsibilities later — like building credit, buying a home and saving for retirement.

Let's take a look at some practical student budgeting strategies and other money management techniques that can help you take control of your finances. These tips will not only help you prepare for college, but they can also help you manage your money and be financially responsible well into the future.

Create a realistic budget

Having a plan for how you'll spend and save your money makes it easier to achieve your goals. A budget doesn't have to be complicated to be effective. A simple one is easy to create and follow, and you're more likely to stick to it than one that's highly detailed and takes up a lot of time.

Try creating a budget in a spreadsheet or with a simple pencil and paper. You can also use budgeting tools and apps, which make it easy to track your spending while you are on the go.

For example, the 50/30/20 rule is a popular budgeting strategy with students because it's simple and easy to follow. Here's how to get started:

1. Add up your monthly income

How much do you earn or receive each month? Be sure to include money from all sources, such as a part-time job, allowance and financial aid. Calculate your monthly income based on what you take home, not what you earn before taxes.

2. List your monthly expenses

Next, make a list of your monthly fixed and variable expenses:

• Fixed expenses stay the same every month
• Variable expenses can change from month to month

Add everything together to get a clear picture of your monthly spending.

3. Categorize your income and expenses

Now divide your income into three simple categories:

• 50% for needs: Set aside half of your income for essentials like food, transportation, insurance, phone, school supplies and clothing.
• 30% for wants: 30% of your income is for things you want to buy, entertainment or dining out.
• 20% for savings: What's left is saved for future needs, like unexpected expenses or a study abroad trip.

4. Track your progress

Your income and expenses are likely to change over time. Be sure to review your budget regularly and update it if needed. Also, keep in mind that a budget is more of a guideline than a rigid set of rules. If your car needs a repair, you can make adjustments to stay on track.

Track expenses

Expense tracking is a simple but powerful way to see where your money is going each month. You might not think much about buying drinks, snacks or takeout, but those small purchases add up over time. They can throw you off budget and make it harder to reach your financial goals.

Tracking your expenses simply means recording everything you buy. Nothing is too small to include, even a drink machine purchase. At the end of each month, review your list to see if you can spot anything you're overspending on. Then cut back or eliminate that expense to free up money for things you need or to grow your savings.

For example, many college students can cut back on:

• Transportation (consider walking or carpooling instead of using a rideshare service)
• Subscriptions to streaming services
• Delivery services (e.g., Grubhub or DoorDash)
• Off-campus gym memberships (on-campus facilities are typically covered in your tuition)
• Impulse shopping
• Frequent dining out with friends

If you don't use cash often, check your bank statements to review your debit card purchases. A budgeting app helps make it easy to track your spending with your mobile device*. For example, with the Citizens Savings Tracker¹, the Smart Save² feature monitors your spending to find extra money that you can transfer to your savings account.

You can also record purchases with a small notebook. Whatever method you choose, make sure it's one you'll stick with so you understand where your money is going and adjust as needed.

Develop smart spending habits

Learning to spend wisely is an important part of responsible money management. It's an effective strategy to help you save for college and other goals. Smart spending doesn't mean you can never treat yourself or have fun. It's about ensuring your needs are covered first and looking for ways to cut costs when possible.

Prioritizing your expenses can help you make smarter spending decisions. To do that, you'll need to decide whether something is a need or a want. A need is something you can't live without, like food and basic clothing. A want is something that is nice to have but isn't essential, like streaming services or the latest gaming system.

Controlling impulse purchases and emotional spending can help you stay on budget. Here are some simple ways to avoid overspending:

• Unsubscribe from marketing emails
• Use shopping lists
• Wait for items to go on sale
• Wait 24 hours before buying anything you don't need
• Delete shopping apps from your phone
• Avoid shopping when you're stressed or upset

One easy way to save is to look for student discounts. These are offered at many restaurants, retailers, movie theaters, public transportation, museums and more — often all you have to do is show your student ID. Don't be shy about asking for a student discount if it's not advertised. The worst they can do is say no.

When shopping, be sure to look for coupons before buying anything. Many stores offer them to draw people in and increase sales. When shopping online, look for promo codes before checking out. Taking a moment to do a quick search could help you save money with almost no effort.

Get ahead of common financial challenges

Many students struggle with the high cost of tuition, but several strategies can make college more affordable. One is to attend a community college for your first two years and then transfer to a four-year school. Attending an in-state school might also help you save, since state residents typically pay much lower tuition than out-of-state students. Scholarships, grants and work-study programs can also decrease the amount you'll need to borrow through student loans and help you graduate with less debt.

Where should you keep your money? Carrying cash in your wallet isn't the safest choice. A better option is to open a student checking account. Student accounts typically don't have any maintenance fees, and they often come with other perks, like online and mobile account management and a free debit card.

As a student, credit cards can be an important safety net in an emergency — but it's important to use them responsibly. Making on-time payments and keeping your balance low helps you build a strong credit history, which can give you an edge when applying for housing, financing a vehicle or even landing a job after graduation.

Set financial goals

Having one or more goals you are working toward can help you stay motivated and make it easier to stick to your budget. What do you want to accomplish? Maybe you're saving for college tuition or a new laptop, or perhaps you just want to feel more in control of your money. Whatever your goal, write it down and review it often to help you stay focused.

Dividing your savings into short- and long-term goals allows you to focus on your immediate needs and plan for the future. Short-term goals are things you want to achieve within a year, like saving for a new laptop. Long-term goals typically take several years to achieve and involve larger amounts of money, like saving for a down payment on a car.

An important key to achieving your financial goals is to create a savings plan — and stick to it. One easy way to stay on track is to automate your savings so you don't have to think about it. Choose a bank that lets you set up automatic monthly transfers from your student checking account into your savings account. This ensures that part of your income is set aside before you have a chance to spend it.

A strategy that can help you achieve your financial goals faster is to keep your savings in an account that earns interest. Through compound interest, you'll earn money on your savings and the interest that's already been earned. The earlier you start saving, the more time your money has to grow.

Build an emergency fund

Building an emergency fund is essential for students. An emergency fund is money you've set aside for unexpected expenses. It's an important safety net that helps you avoid dipping into your savings, relying on credit cards, taking out loans or borrowing from friends and family.

The best way to build an emergency fund on a student budget is to do it gradually. Start with a modest goal of $100. When you achieve that, increase your goal to $250, then $500. Be sure to add it to your budget — small, consistent savings can grow your emergency fund faster than you might think.

Also, consider selling unused items you don't need, taking on odd jobs and saving any money you receive for birthdays and high school graduation to add to your emergency fund. The more you have in your account, the better prepared you'll be to handle a sudden expense without derailing your budget.

Seek financial advice and resources

If you ever have a financial question, help is available. See if your school offers free financial resources. These services are included in your tuition, so you might as well use them.

Your school's financial aid office can help you understand your student loans, and they may know of scholarship and grant opportunities available to you. Student advisors are your go-to source for money management advice, and career services may help you find internships or part-time jobs to earn extra money and gain valuable experience.

For more complex financial issues, it's best to consult with a financial professional. Many banks offer free financial counseling services to their customers, and nonprofit credit counseling organizations offer free or low-cost support for budgeting, managing debt and improving your credit. You may need a paid professional for some financial matters, like a CPA for taxes or a financial planner for investing.

Take charge of your finances

You don't have to be perfect right away — the important thing is to take action. Start by creating a simple budget so you can see where your money is going each month. Then, track your spending to look for ways to free up money for an emergency fund. Don't forget that help is available if you need it.

The money skills you are learning now will benefit you for life. They can help you make smarter financial choices and avoid unnecessary debt. The sooner you start developing good financial habits, the better prepared you will be for college and beyond. If you're to take the next steps on your financial journey take a look at the options available to you from Citizens.