Tag Archives: spending plan

Fresh Start with a Spending Plan

How do you plan to manage your money this semester?  The beginning of a new academic year is a great time for a fresh start when it comes to juggling your finances.  For students, each semester typically begins with a fresh lump sum of money to be used for books and for the semester’s living expenses.  And how a student manages that lump sum is not very different from the way anyone manages their regular paychecks (or direct deposit….I don’t remember the last time my pay actually came in a check).

Developing a spending plan requires that you know how much you are spending on things.  There are countless ways to track how much you are spending, ranging from financial computer programs to spreadsheets to old fashioned ledger books.  How you keep track of things is much less important than the fact that you need to keep track of things.  Some expenses occur once a semester (like tuition or books).  Many expenses occur once a month (like rent and utilities).  Some expenses occur even more frequently (like food or auto fuel).

The other part of developing a spending plan is knowing how much money you have available to work with.  For many of my readers this may be a big chunk of student loan funds that is about to refund to you to carry you through the entire semester.  For some others it may be withdrawing from a savings account.  For some it may include funds from a job.  But you need to know how much you have so you can determine how much you can spend.

Once you have established the resources available to you, then you can start subtracting out your expenses.  Start first with expenses that are required and relatively fixed—your rent and utilities and insurance.  Then you will know how much you have left to spend on things that are more flexible, such as food (which is required, but how much you spend is highly variable), entertainment, and clothing.  If your resources exceed your expenses, that is ideal.  Then you’ll have some to tuck away for an emergency or unexpected future expense.  If your expenses exceed your resources, you will need to rework things.  Figure out how you can spend less.  Or figure out how you can add more resources.  Maybe you need a job.  Maybe you need a student loan.  Maybe you need a roommate.  Maybe you need not to have a car.  There are many ways to make adjustments to your spending plan—and I’m fully aware that many of those choices are difficult to make.

As you start on your fall semester, I know you don’t want to spend a lot of energy on establishing your financial plan.  But if you put in the effort now, you’ll be much more financially secure when we get to final exams in December.  You can control your money rather than letting it control you.

 

Happy New Year!

Happy new year!!!  I know that most people celebrate the new year on January 1.  But for those of us who live our lives in higher education, the new year always starts in late August and ends in mid-May. The months in between are simply a big blur of trying to squeeze in some vacation time while still working at breakneck speed to make sure everything is ready in time for the new year.

For many folks the new year involves making resolutions.  And a very popular resolution is about building a budget to manage your money.  If that B word scares you, call it a spending plan instead.  It somehow sounds less like a punishment and more like a goal that way.  Unless you are independently wealthy (which is rare among students), a spending plan of some sort is a necessity to make sure you have enough money to get through the semester.  Otherwise you could find yourself surviving on a menu of ramen noodles three times a day by the time you get to exams, when you most need some decent nutrition to power your brain.

There are a lot of online tools available to help build a spending plan.  I’ve tried a bunch of them, but I always end up coming back to a good old-fashioned spreadsheet.  It’s tried and true and does exactly what I want it to, giving me flexibility to manipulate and analyze my own data.  I like to start with my monthly income—that stays the same every month.  Then I subtract fixed expenses like my housing, insurance, debt payments, and utilities.  Then what is left over is what I have left to divide among the things that can be flexible from month to month, like food, gasoline, entertainment, medical expenses, and clothing.  All of these are necessary in my life, but I can spend varying amounts depending on the month.  If I spend more in one category, I may have to carve it out of my spending in another category.  And I always put some money in savings each month for future emergencies to prevent the need for future adjustments to my normal spending plan.

Things work a little differently for students living on student loans funds during the academic year.  You may be receiving a large refund at the start of the semester that you need to portion out over the full semester.  I generally recommend putting the lump sum into a savings account.  Some of the online banks are actually starting to pay a somewhat reasonable interest rate again, rather than just a fraction of a percent, so a savings account can actually earn you a bit of money.  Then each month you should transfer a designated amount to your checking account, so it is more readily available for that month’s expenses.  But once that month’s money is gone, don’t let yourself transfer more until the next month’s designated “pay day.”  That will make it easier to keep some control over your spending plan.

It’s the start of a new year.  It’s a fresh start.  New semester.  New classes. New people to meet. For many, a new place to live.  A new spending plan.  Now is your chance to get the year started right.  Happy new year!!

STRESS!!!!!!

We have arrived at a time of great stress.  Stress is largely caused by situations over which you have little to no control.  Such as upcoming law school exams.  Such as a global pandemic that seems to be getting worse rather than better.  Such as the end to a turbulent election cycle.

These things weigh on us because we can’t really control them.  We can only control how we react to them.  You can’t control what your exams will be like.  You can control how you prepare for them.  You can’t control how the Coronavirus will progress.  You can control how much you stay home, wear a mask, and wash your hands.  You can’t control how the election turned out.  You can control how much you tune in to overly political news and opinion pieces.

Money is another thing that causes stress for a lot of people (usually because there never seems to be enough of it).  How much money comes in and when is not always something we can easily control.  We can, however, usually control how much goes out.  We have the ultimate say in how much we pay for housing, transportation, food, and entertainment (among other things).  A well-organized spending plan can help you to make sure that your outgoing funds are less than your incoming funds…and that any extra is safely tucked away for those unexpected emergency moments.

Life is full of stressors—things that we just can’t control.  The world is very uncertain right now. But in times of great stress, it’s important to focus on the things that you CAN control, which should ultimately ease that stress.

The New Year’s Resolution that Scares Me Most

I’m terrible at budgeting.  It’s a hard thing to admit, given that I’m supposed to be some sort of expert on financial stuff.  I’ve tried apps and books and spreadsheets and everything else you can imagine.  And I always struggle.  I understand the concepts.  I know what I’m supposed to do.  I’m supposed to categorize things and track things and spend less than I earn.  It’s easy in theory and really hard in practice.

I think my big road block is that it’s a really big thing to tackle.  Tools and concepts make it easier, but I still just have to do the work.  And I’ve made it my resolution to do it this year.  But my plan of attack is different this time around.  I’m breaking it down into steps.  This month I am focused on one thing only:  tracking my expenses to see where my money is going.  After that is done I’ll be better able to analyze where I am overspending so I can shave my outgoing cash flow.  Then I’ll build the budget spreadsheet from there.  Then I’ll focus on paying debt.  Then I’ll focus on increasing income.  Then I’ll focus on saving more.  And so on…

It’s a lot of steps and the whole process is going to take a long time.  A very long time.  Months.  Years.  Until retirement, probably.  But starting is the hardest part.  I’ve always done it wrong.  When I tried to do all of the things at the same time it became overwhelming and I either failed or gave up.  I have promised myself not to let that happen this time.  I’m going to take baby steps.  And it’s going to be hard.  But now that I’ve put it out there, I’m accountable to you for this project.  And I’ll keep you updated on my progress.  Hopefully we all can learn some things together.