I absolutely HATE budgeting (and I think you probably should too.)

I wanted to start with that point because virtually all sources on budgeting seem borderline sadistic to me. They start talking about crunching the numbers and tracking your spending and I just feel the urge to hide in my closet and think about childhood when my parents would buy all the stuff I needed.

But we all have to grow up at some point. Relatively speaking, college is actually a great time for most people to be learning it for a few reasons:

• You have tons of safety nets (parents, college loans, etc)
• You have cheap entertainment all around (clubs, events, other students dorm rooms, etc.)
• You get a bunch of included resources (free class help, gym access, etc.)
• You have limited options for dumb spending (credit limits)
• You have a limited Income…

Limited income is a positive?!?

Oh yea! You don’t try and learn to swim without going into the water at some point. Having a limited income is awesome for learning how to budget because you absolutely need to learn the difference between necessities and desires. The better you learn the difference between these things, the better you are going to be at budgeting.

One quick note for this article: Some students have cash resources that they’re spending to pay for college instead of an actual income. For this all to make sense just divide the money you have by the time it needs to last and consider that your income.

College is often the deepest level of poverty a person will ever live through. If you can budget responsibly through college then the rest of your life is going to be a breeze.

Why Your College Budget Will Fail

I experimented with different budgeting systems before and they all seemed to revolve around tracking the money you’re spending. Every time that you spend some money you’re supposed to have some way of knowing where that money went.

This makes is possible to learn the fundamental rule of “building wealth” (AKA not being broke and “borrowing” your roommate’s food.)

Spend less than you earn.

If you only have $1000 coming in each month then you should spend less than that. As long as you spend less than that you won’t be broke.

It’s simple, right?

The typical approach to spending less than you earn is by tracking spending. It’s easy to overspend. That is why most people approach budgeting from an accounting perspective. Count the money coming in. Then compare it to the money going out.

As anyone that’s ever tried that approach has probably found out: It sucks. Going to college has enough new problems to solve. How about something I little less miserable?

No matter how you try to track your spending for a traditional college budget, you’re going to end up wasting hours and hours of time. You may need to hold onto your receipts. You may need to write down every expense. You may need to watch your credit card every month and feel guilty every time you go over it.

This whole time you’re going to be thinking about the money you have left (or the money you don’t have.) That is not fun.

The reason your college budget will fail is not because designing a college budget it tough. The reason it will fail is because you will probably never follow through with it.

The most important part of your budget is your ability to follow through. If you don’t want to follow through with tracking your expenses or assessing how much money you’re wasting later then you’re not going to do it.

Despite my distaste for counting dollars as they leave my pocket, through my years in school I created a college budget style that ended up being really easy to follow through with. It didn’t require much tracking of what money went in and out. More importantly, it worked.

It helped me have college paid off on graduation with only a job washing dishes part time. I almost never kept track of the money I was spending and by the end of college, I had more money in my savings than when I started.

Hold on a second… before you dig in:

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The Simple College Budget

I’m going to layout some ground rules for creating a college budget that’s easy to follow through with.

1. Design a bare minimum budget.
2. Follow through with it loosely
3. Set an ignorable spending price. (For example, if it’s less than $15 and not regular then don’t worry about it.)
4. Track everything above the ignorable price.
5. Adjust It

1. Design A Bare Minimum Budget

Forget about balance when you’re designing your budget.
Balance won’t motivate you to follow through. Balance is more difficult than just picking a side and sticking with it. Every time you spend too much money on a “fun” expense you’re going to be tempted to do another. It’s easier to start with the extremes in mind.

Create a budget of your absolute bare minimum expenses for following through with the budget. If you’re disciplined then you can keep your budget at food, shelter, tuition, and the other essentials for a college budget. If you’re not quite as regimented then you will have to ask yourself some tough questions.

• Do you really need your phone? (I’ve officially retired my phone plan.)
• Do you really need a clothing budget? (Seriously, clothes can last almost forever.)
• Is living off campus cheaper than on campus? Is it worth it with other expenses?
• Can you do what you do in a cheaper and in an equally enjoyable way?

At least one time you should think about every regular expense that you have. If you think you could live without that expense then I can almost guarantee you can. (If you think you can’t live without some particular expense you’re almost guaranteed wrong.)

Have you ever heard the phrase “a dollar saved is a dollar earned?”

That’s only in an income tax-free environment. A dollar saved is worth well more than a dollar earned. For most people, a dollar saved is more like earning $1.50. For a college student with a limited income is probably closer to $1.20. In more interesting terms, for every $100 you save you might as well be making $120.

How does your bare minimum budget look at the end of this?

If it’s over your income.

This is bad. You have one of two problems:

1. You are is a super high expense situation.
2. You are massively misunderstanding what your needs are.

If your budget doesn’t rely on you eating spoonfuls of peanut butter for sustenance then you’re probably not cutting your budget as low as you practically can.
People are living on virtually no resources all around the world. If you think your phone is a necessity then you have much to learn.

Some typical problem areas:

• Dorm rooms at college tend to cost a fortune.

In many areas, you can get a one-bedroom apartment for less than your college dorm room that you’re sharing with roommates. In most areas, you can get a multi-bedroom apartment for less than a college dorm when you’re sharing it. Pretty much everywhere else you can rent a bedroom (and heck, share it if you were really cheap) for dramatically less than the price of a dorm.

• Cars are big money holes.

There are times when you need a car. If it’s at all possible then try to avoid owning a car. Cars breakdown. Cars allow you to go out spending. Cars will make your friends try to milk you for rides. Cars cost gas money. Cars cost insurance. In short: cars are expensive. Paying more for an apartment closer to campus is worth some good money. Or get a bike.

• Regular expenses

Regular expenses add up fast. Turn every regular expense you can into a single big expense. It makes keeping the magnitude of the expense a whole lot easier.

Ask yourself seemingly silly questions like…
Would I pay $50 a month for internet?
Would I pay $600 a year for internet?
(Yes… I’d pay my whole income and give up on food for internet. That doesn’t make it smart.)

You might notice your answer changing despite the financial obligation being the same.

If it’s just within your income…

You’ve probably spent time budgeting in your life.

That being said, I think you’re in for some serious compliance risks. What happens when your budget goes to hell and you decide to do something stupid? What if you forget a few receipts? What if you go a month or two without following your budget as closely as you should?

This is supposed to be a bare minimum budget.

Is this really your bare minimum? If so, I’d be seriously concerned with reducing your budget or increasing your income.

If it’s not really your bare minimum then keep cutting away at it.

If your expenses are below half of your income

This is the range you should be aiming for as a minimum.

(I can already hear the rage from city dwellers and iPhone purchasers. “IT’S IMPOSSIBLE!” In 95% of the world, even with a super low income, it’s possible to live comfortably on half of your income.)

By ensuring your budget is dramatically lower than your income you give yourself the freedom to ignore a big chunk of the tracking required. Think it still sucks? Well… think about this.

With a typical budget, you could spend a little more money but you also need to worry about tracking that money. You also need to worry about not adding expenses (because you used up your budget.) Every day you’ll feel that budgetary restriction.

Your friends might want to go see a concert and you’ll have to say, “it’s not in the budget, I already spent my fun money.” Or… you’ll have to fail your budget.

By cutting your expenses dramatically you get to control where your fun money goes without tracking every penny of it all while knowing you’re nowhere near breaking your budget.

With a traditional budget, you need to restrict your spending daily. As the rules you’ll learn later will help you with, with this budget you restrict your spending once (and once in awhile.) You never have to pay attention to the money you don’t have. You end up building a savings so you actually have money to blow when you want to.

In other words, by not spending money on stupid big and regular expenses you get only a little pleasure out of, you get to spend that money on stupid big expenses that you get a ton of pleasure out of.

(In college, I was able to live on around 40% of my income monthly while paying for school. In summer, I could easily live on under 20%.)

2. Follow Through With It Loosely

Your budget should be followed 90-95% of the time but don’t you dare track that to verify.

If you start getting worried you’re spending too much then assume you’re right.

Following through with a bare minimum budget might be tough at first but once you get into the rhythm you’ll notice a few things:

1. Habits will make it super easy.
2. You will stop thinking about buying stuff you don’t need.
3. You find better ways to spend your time.
4. You have way more time and way more excuses to hang out with friends.
5. You’ll have a savings account building (and that will feel damn good.)

If you fail to follow it a few times then consider adjusting your bare minimum budget accordingly. If you don’t have the room to add anything new to the budget while staying under 50% of your expenses then look for something else you wouldn’t mind cutting.

You can go over 50% but the higher you go over, the more you need to track your spending (and, in my experience, the less likely you are to follow through with it.)

Of course, you can also work to pump up your income a little. Increasing your income may be awesome but I don’t recommend using it as an excuse to never learn what you really need. Plenty of people are permanently broke despite having huge incomes because they never learn to live on less than everything they make.

3. Set An Ignorable Price

You should not have to track small expenses.

If you want to buy a water or something, you shouldn’t need to store the receipt or write it in some kind of a spreadsheet.

This is where most budgets fail.

It is difficult to track your spending. There are days when you forget receipts. There are days when you won’t feel like it. Those rare instances make most budgets almost completely useless because when your expenses are close to your income these little expenses knock you over your budget.

By keeping your spending dramatically lower than your income you have a safety net with your spending. If you end up spending $50 a month on stupid little expenses then it will probably have a negligible effect because you’re still saving tons of money to pay for it.

There is a difference between spending a few dollars randomly and a notable expense.

Through college, I kept my limit as low as $10 but I could have easily afforded twice that. Every time I was spending less than $10 I wouldn’t worry about tracking it.

The specific price is dependent on how much room you have in your budget. The lower your spending relative to your income, the more you can spend without tracking it. In college with a low income, this should be a reasonably low number. It should be a number that you could spend about daily without breaking your budget (but, ideally, you shouldn’t be spending it daily.)

For example:

If you have a budget of $600 a month for non-school expenses and you find a way to live on $300 a month then you might want your number around $10.

Once you have that number use it to guide when an expense is worth tracking and when it isn’t. If the expense is less than $10 and not a regular purchase then don’t worry about keeping track of it.

4. Over The Ignorable Price

If the expense is more than your ignorable price then you need to treat it in one of two different ways:

1. Write it down somewhere where you can keep track of these larger unplanned expenses. Naturally, this comes with the responsibility of keeping track of when you accidentally go over your expenses.

2. Cut back on another expense until you can reimburse yourself the cost.

This whole time you should be building a savings that you use as your guide. If your savings hasn’t gone up at the end of the month then you need to be able to explain why. That is your fundamental responsibility with this budgeting plan.

There are times when major expenses will reduce your savings but whenever that happens you need to be able to explain why that is. If you can’t explain it then you need to start tracking more of your expenses or reduce your regular spending budget. (So either lower your regular spending or lower your ignorable price.)

Months that your savings go up you know you’re within a reasonable budget.

Using this strategy you don’t need to skip out on big fun expenses. These expenses are a natural part of life. Those expenses are why the regular budget is so strict. It means you have plenty of fun money to play with in your college budget.

As long as you track the major expenses you’re using for entertainment and that money is coming out of the savings you’ve already built then you don’t have to worry about spending it.

Naturally, a “responsible adult” might recommend saving or investing that money. If you do that, you’ll probably be better off but if spending your savings on stupid junk is the only way you can get yourself to stick with a budget then do what you must. (Just don’t go below zero in your savings. That’s where it starts to become irresponsible and foolish.)

5. Adjust It

Naturally, your first attempt at this budget will probably fail.

You might spend too much (or preferably) spend too little while just hating the process.

That’s not a problem.

Typically, when a person fails to with a more traditional budget they end up giving up completely because the process is so unpleasant. They despise recording all the money they’re spending. They don’t see any tangible benefits. They want to buy something stupid. Eventually, it all adds up to them just giving up completely.

With this strategy, you’re constantly developing a relatively massive safety net. That safety net is a savings that you can actually get the pleasure of watching go up (and not in small numbers. You should typically see your savings grow by 25% or more of your income every month.) This is an easily visible benefit.

This savings will drop regularly for major unexpected purchases (sometimes fun ones and sometimes required ones.) This is dramatically better than being forced to beg or go into debt to save your future budget options.

With this strategy, instead of failing completely, you have to expect some inconsistency. Some months you’ll follow your strict budget closely and see a massive improvement. Other months you might be a little loose with your budget and lose some ground. With a visible measurement like you’re savings this becomes practical to manage.

When you see your savings drop excessively you’ll start noticing the urge to spend less to recover some of your losses. If you notice you save particularly well you might want to have a little fun. Embrace those urges. They’re a mechanism you can use to adjust your behavior in the future.

Developing a college budget doesn’t have to be a painful process. I believe it shouldn’t be.

Instead of going over the top with restrictions on what you’re allowed to spend on a day to day basis you can focus on changing your philosophy of money in general. This change of philosophy can allow you the freedom to buy what you want when you want it while being careful not to pick up regular expenses that make this impossible.

You can probably do okay living paycheck to paycheck. Plenty of people do it. This idea that you can (or have to) spend every penny that you earn will never go away.

There are plenty of paycheck to paycheck people making multiples of what you earn right now. They continue to spend every penny they earn. If you were to ask them, virtually all of them would tell you that almost all their expenses are “essential.” (Well… I need the latest fashions for my job…. I need the brand new car to impress clients…)

This paycheck to paycheck mentality does not end with an income change. It ends with a change in perspective.

I started my savings working in fast food before I ever went off to college. I shared a cheap apartment and worked part time paying for school and increasing my savings. I don’t say this to impress you (it shouldn’t.) I’m just trying to tell you that this isn’t even close to impossible. I lived on an income well below poverty level through this whole process. You do not need much money for basic survival.

This acceptance of a lower regular spending gives you the freedom to make your spending decisions without long term commitments. Instead of spending hundreds of dollars a month on a car loan you get to spend hundreds on your entertainment or school payments. This is really a decision of what matters to you.

Update: I really loved Jessica Dang’s (MinimalStudent.com) series on this:

A Minimalist Guide To Money & Investing

Trust me. Read it. It’s awesome.

Most of this regular spending that most people completely fill their budgets with (expensive apartments, cars, and credit card debt) are things that people don’t enjoy that much anyway. Often their “stupid” expenses like travel, events, and day to day entertainment have to get sacrificed for them. This is where most motivation to follow through dies.

A college budget that you don’t follow might make an accountant feel good but it sure as hell isn’t going to help you get through college. Set reasonable expectations and creates systems that are designed with room for your own moods. You’ll be setting yourself up to win.

If you’re looking to learn about 7 Free Resources For College Students? You can access it for free over in our members only section.

Do you have any awesome strategies for budgeting in college? Be sure to share them below.

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