Personal Budget Guide

Psychology graduates have plenty of high-paying job opportunities at their fingertips, but they must deal with the stress of paying for their education first. The 2017 American College Health Association survey found that 33.9% of students reported finances as an area of stress in the past year, second only to academics. Still, only about 41% of Americans use a budget to track their spending, and those who do report that budgeting helps them save a little each month for retirement, emergency funds, and other financial goals.

Outside of college students' usual tuition, housing and meal costs, they must also consider other living expenses -- including car payments and bus passes -- plus potentially reduced work hours during the school year. Budgeting can help you you quickly determine where you spend your money and identify areas where you can spend less, giving you some more control over your finances. Developing a budget and sticking to it takes determination. Use the tips below to get started designing your budget, figuring out how much you have to spend each month, and identifying how you can cut costs on both fixed and variable expenses.

Budgeting Terminology

  • Total Income
    Include savings accumulated before the start of school, such as summer job earnings and monetary gifts from friends and relatives. If you have financial aid that exceeds tuition costs, it can defray school expenses and regular income from a full- or part-time job.
  • Monthly Income
    Include recurring funds, like wages from a part-time job. Understand this income may vary from month to month depending on the number of hours worked.
  • Discretionary Income
    This is the money you have left after paying for essential costs, like purchasing books or paying for any special equipment needed for your classes.
  • Essentials
    Food, shelter, and utilities top the list of essentials, but think about other expenses that can help you succeed at school, like a new computer. These expenses also include obligated costs, like debt repayment.
  • Nonessentials
    Nonessential expenses represent things that are nice to have, like a new pair of shoes or a trip to the theater for a movie. You'll want to consider whether these items will help you succeed in school.
  • Fixed Expenses
    Some costs, like rent and car payments, stay the same from month to month.
  • Variable Expenses
    Some bills like gas, utilities, and groceries, change from month to month. You have some control over your variable expenses.
  • Emergency Funds
    These funds represent savings set aside each month to put towards unplanned expenses, such as car repairs or a book needed to complete a research assignment.

Track Your Spending

  • Assess Current Financial Spending
    Take a close look at bank/credit union statements and credit card charges for the past several months. Before developing your budget, list all your transactions and how much you spent or received to establish your spending habits, and identify all essential and nonessential expenses.
  • Categorize Expenses
    After listing all expenses, decide whether those bills represent essential costs or nonessential costs. Essential payments often include expenses such as rent payment or car insurance, along with variable costs for utilities and food. Also consider items you need for school, such as internet service and books, and any special costs for childcare or medical services. Separate your monthly spending into broad categories that include payments for shelter, transportation, utilities, food, and education.
  • Do the Math
    Double check your list of essential expenses to ensure you didn't omit any costs you'll need to be prepared to pay. With that done, add up the total cost of your essential bills for each month. Subtract this amount from your monthly income to determine how much is left over for discretionary spending.
  • Create Your Budget
    Once you've determined your income and essential expenses, it's time to create a budget. Remember, a budget represents your spending plan for each month and helps you keep enough cash on hand to cover your expenses. Review the discretionary income identified in step three. The experts at Mint recommend keeping expenses within a 50/30/20 budget: 50% of your income for essential expenses, 20% for savings, and 30% for discretionary spending. Savings can help build your emergency fund, meaning you'll be able to cover unexpected costs without having to borrow money. However, the above percentages serve only as a guide -- consider your personal income and expenses, and find a system that works for you.
  • Cut Costs
    If you ran the numbers and found your essential expenses require more money than your monthly income brings in, consider your options for cost-cutting and saving. Look at the services you use, like your cell phone plan, and shop around for the best deal that meets your needs. Some fixed expenses, like rent, may not be easy to reduce. However, perhaps you can find a roommate to help subsidize those costs, or move to a cheaper home. If you're commuting long-distance, find other students to carpool with, or condense your class schedule to reduce your trips to campus.

Maintaining Your Budget

Your budget isn't set in stone; all numbers are subject to change, so make sure to keep your budget up-to-date. Track your expenses consistently to stay on track with your budget, and if you're going over in certain categories month after month, consider starting your budget process again from the beginning. Also, if you've paid off a debt, you may now have additional income put toward savings or special discretionary expenses. Revisit your budget every few months ensures you stay the course with your spending and saving goals and potentially find new areas to cut expenses. If you forgot an expense during your initial budget development, take a moment to add that expense to your spending plan

Left to Spend: The simple app tracks spending and tells you how much discretionary money you have left to spend each day. Users establish their daily allowance and enter the amount they spend following each transaction. The app doesn't keep a spending history or require syncing with bank accounts. Available on iOS devices.

Microsoft Excel: Spreadsheets can be useful tools in developing and tracking your budget. Microsoft offers multiple templates for budgeting, from simple income and expense tracking to detailed charts and graphs showing where you spend your money. You can even set up sub-budgets for special projects like holiday shopping, vacation planning, or wedding planning. Spreadsheets make it easy to develop a custom budget template. You can create unique categories based on your financial needs by adding additional columns or rows.

Mint: Mint syncs with all your financial accounts to track monthly spending and help you meet long-term goals. It collects all your bills in the app and lets you see when they're due. It also monitors your accounts for suspicious activity, helping to identify fraud early. You can also find the best deals on financial products like checking accounts or investment accounts and monitor your credit score.

Personal Capital: Use the free tools available through this site to track your spending, manage savings, and plan for your future. The app provides a quick view of your net worth and lets you know all fees you're paying for investment accounts. It also helps manage your investment portfolio and evaluate those based on your long-term goals.

Simple.com: Simple offers free, FDIC-insured checking accounts that use integrated budgeting tools. The company charges no fees for the banking services, which include mobile banking with debit cards, photo check deposit, and director deposit. Users may incur fees when using out-of-network ATM machines. The app works with iOS and Android devices.

Wally: The free app compares income and expenses and tracks where you spend your money. You can track when and where you make purchases. You can also easily see how much you've saved. Developers sought to offer a tool that was easy to use yet powerful enough to give users a feeling of control over their finances.

YNAB: The app tracks spending by category, plus overall spending. Sync your bank accounts with your YNAB account and enjoy access from your mobile device or computer. The app tracks progress toward financial goals, with easy-to-understand charts and graphs that show where your money goes. YNAB also offers workshops on budgeting, using credit responsibly, and saving for the future.

Adopt Healthy Spending Habits

By setting and sticking to a budget now, you're forming a healthy habit for life-long financial well-being. Make use of technology like Spending Tracker, Habitica, and Slice to keep a close eye on where you're spending your money and how you can save. Learning to use credit cards responsibly can also help you build a strong credit score, setting you up for better loan terms in the future.

At-Home Meal Preparation

An easy way to cut your food bill is to replace expensive trips to restaurants or fast food joints with home-cooked meals. Pack your lunch each weekday to save you about $3.70 per meal, and plan your meals each week to make your grocery shopping as efficient as possible; for example, leftover baked chicken can become the base for a filling chicken soup the next day. Consider using meal planning apps and dedicating time each week for meal prepping, which will save you time along with money. When you go out with friends, consider using an app such as CheckPleaseLite to help split the bill and figure the tip.

Use Student Discounts

Businesses near colleges often recognize the buying power of the students on campus, offering student discounts on food, clothing, and services to help reach these potential customers. Ask local merchants if they offer discounts that can help you cut your costs on expenses for checking accounts, movie tickets, or dinners out. Many colleges also provide recreational and entertainment opportunities at no cost to students. Check with local parks departments, as well, for inexpensive activities to enjoy outside of class.

Find Cheap Textbooks

Books can take up a sizable chunk of your budget each semester, costing anything from a few hundred dollars to more than $1,000. Find ebooks or used textbooks to save on this expense, and consider downloading for free or cheap or renting books from the library. Websites like StudentRate Textbooks or the app Textbook Me help students find the best deal for the books they need to succeed. Check student message boards at your school for deals, as well. Last semester's students may have books they're willing to sell.

Graduate Earlier

Many people consider an undergraduate degree a "four-year" degree, but less than half of students complete their bachelor's degree in that time. Most need an extra semester to complete their degree requirements, which adds to their education expenses. Take an extra class each semester to help you graduate sooner, or accelerate your program by getting a head start through Advanced Placement or dual-credit classes in high school. Also consider seeking credit for prior knowledge you through CLEP testing.

MyMoney.gov: Learn about basic personal finance, borrowing money, and protecting your information with this comprehensive website. It also includes financial calculators, budgeting worksheets, and checklists for managing your money.

Free Application for Federal Student Aid: Completing your FAFSA in a timely manner ensures you receive the maximum federal and state financial aid award possible. The U.S. Department of Education uses FAFSA information to award subsidized and unsubsidized low-interest student loans, as well.

College Scorecard: Created by the U.S. Department of Education, this site allows students to compare schools by program, location, and size. The scorecard provides information on the annual cost of attendance, graduation rate, and average post-graduation salary.

Internships: You may be able to find paid internship opportunities while completing your psychology degree. If so, you can build your resume and sharpen your skills while also earning extra income.

CLEP Tests: The College-Level Examination Program allows you to demonstrate your knowledge in a subject area without taking a class, saving time and money toward degree requirements. The CollegeBoard offers 33 CLEP exams, accepted by more than 2,900 colleges and universities.

U.S. Department of Education: The department offers multiple resources and tips for developing a budget, balancing work and school, and creating a strong financial foundation while in college.