Personal Budget Guide

The higher education experience demands careful money management skills, especially for full-time students whose academic schedules preclude them from working during the school year. Many students also receive the majority of their educational financing in lump-sum payments at the beginning of each semester. Creating a thorough and sensible budget remains the most effective way to make sure you do not overspend.

Surprisingly few people stick to personal budgets, with a 2016 U.S. Bank report indicating that only 41% of Americans budget. Personal finance experts often cite college as a critical time in a person’s financial life, as students tend to form spending habits during these years that carry forward into the future. Given that the average student loan borrower leaves college with a debt of around $37,000, healthy money management habits can also help recent graduates pay off their loans faster and get themselves on a solid financial footing.

Medical billing and coding students face several specific budgeting challenges, particularly since programs range from two to four years in length. These factors influence costs and require students in longer and more expensive programs to pay closer attention to their personal finances. This guide introduces key terms and concepts, explains budgeting tools, and shows students how to keep costs down.

Getting Started

Budgeting Terminology

Total Income: Your total income includes all the money you possess when your study period commences, counting your savings, your financial aid instalments, and any additional funds earned at jobs or elsewhere.


Monthly Income: This represents the amount of money you bring in each month from part-time employment or other sources. Monthly income often fluctuates, so many students make conservative estimates when creating longer-term budget projections.


Discretionary Income: This term describes income available for use at your own discretion. It serves as another name for spending money.


Essentials: This list covers necessities for living and things you need for school, such as food, clothing, personal care products, and school supplies. Anything you cannot function without goes in this category.


Nonessentials: Nonessentials include things you want but do not need, such as a new outfit for a party, concert tickets, and a weekend road trip.


Fixed Expenses: Bills and costs that recur each month in the same amount each time qualify as fixed expenses. Monthly rent is a good example.


Variable Expenses: These expenses recur monthly, but not necessarily for the same amount each time. For instance, your electricity bill varies from month to month depending on how much energy you use.


Emergency Funds: Also known as contingency funds, emergency funds provide cash for lean times and the unexpected expenses that tend to strike at the worst possible time.


Track Your Spending

  1. Assess Current Financial Spending: Make a list detailing everything you spend money on in an average month, noting how much you spend on individual items. Use copies of your last few monthly bank statements to corroborate your estimates, deferring to your actual spending habits as detailed on your financial statements if you find a discrepancy.
  2. Categorize Expenses: Next, take every item on the list you made and categorize it as "essential" or "nonessential." Essentials usually include both fixed and variable expenses, with fixed expenses including rent or mortgage payments, car and insurance payments, and tuition fees. Groceries, utilities, and transportation all count as essential variable expenses. When performing this categorization, do not forget about education-related expenses like books and course materials, internet access, lab fees, and school supplies.
  3. Do the Math: Tally up the total amount of money you need to cover everything on your essentials list from month to month. Then, subtract this amount from your total monthly income. The difference represents your discretionary income. Alternately, you could perform these calculations on a per-semester basis; in that case, you need to divide the leftover difference by the number of months in the semester to determine the monthly discretionary income allowance.
  4. Create Your Budget: Finally, put pen to paper on an actual budget. Most personal finance experts recommend following a 50/30/20 budgeting rule: 50% of your money should go toward essentials, 30% toward nonessentials and discretionary spending, and 20% toward savings or your emergency fund. However, these general guidelines may or may not work for your particular situation.

Pay particular attention to the amount of discretionary income you calculated in step three. This counts as the maximum amount you can allot to personal spending. Typical student lifestyles make it easy to exceed your allowance. If your calculations yield a negative amount, this means you spend more than you bring in each month. Such habits can quickly lead to mounting debt. Look for ways to keep essential costs in check: choose a cheaper smartphone plan, cook at home, buy used books rather than new books, and rent books when possible.

Maintaining Your Budget

Regular budget checks help you prevent excessive spending and keep your financial plan under control. While you do not need to update your budget every single time you spend money, personal finance experts recommend performing weekly reviews to make sure things stay on track. They also give you time to react and keep your monthly finances in line if you overspend during one particular week.

Perform more thorough budget updates anytime your financial situation undergoes a major change. For instance, recalculate your budget if you move to a new apartment with higher or lower rent. The same goes if you land a new part-time job with a different pay level. Financial help and gifts from family members may also prompt budget recalculations if you receive a significant sum.

Budgeting Tools

Tips for Cutting Costs in College

Adopt Healthy Spending Habits: During your time as a student, you build financial habits that can stay with you for a long time. Track your spending and make sure it stays within reasonable limits, with the help of resources like Spending Tracker, Habitica, and Slice. Always use your credit card responsibly, and remember that your school years affect your credit rating for years to come.

At-Home Meal Preparation: With some foresight, you can eat well without committing too much of your budget to meals. Plan and prep your meals every week; take some time on the weekend to figure out what to eat each day, then cook meals in big batches to store leftovers. Purchase generic alternatives to expensive brand-name grocery items, and eat out sparingly. Recent studies show that those who bring lunch from home spend an average of about $6 per day on their midday meal, while those who eat out spend an average of $10. When you do eat out in groups, use money-saving apps like CheckPlease Lite to calculate tips.

Use Student Discounts: Many businesses and services offer student discounts. Students just need to show their current student ID card. Student government bodies can direct you to lists detailing all of the student discounts available to you; these organizations can also connect you with campus resources that host free or low-cost activities and social events.

Find Cheap Textbooks: Cut costs by sourcing used copies, searching for ebook versions of required readings, borrowing texts from the campus or municipal library, or renting books rather than buying them. Helpful resources to draw on include StudentRate Textbooks. You can also try talking to your class instructors about other potential options. For instance, some professors include full textbooks as required readings, even if they only plan to use a few sections of a very large book. You can save money by photocopying those sections from a borrowed edition or by using an older and less expensive edition of the book.

Graduate Earlier: You can also save by increasing your course load each semester, taking as many classes as possible to reduce the total number of semesters you spend in school. This serves as a particularly attractive option if your school charges tuition based on part-time or full-time enrollment status rather than charging by the credit hour. Even in the latter case, accelerating your graduation saves you additional charges on lab fees, facility fees, and student union membership fees. However, make sure not to overextend yourself so much that you compromise your academic performance.

Additional Resources

DoughMain Financial Literacy Foundation: This nonprofit agency focuses on educating young people about personal finance and financial literacy; it offers a wide range of online resources.


NextGen Personal Finance: Developed for high school students transitioning into college, this free curriculum teaches essential aspects of money management in an easy-to-follow, beginner-friendly way.


Money Smart: A project of the Federal Deposit Insurance Corporation, Money Smart helps people with low-to-moderate incomes manage their finances.


National Endowment for Financial Education: This nonprofit group offers financial management advice to people in all stages of life, and its website boasts a special section for college students.


Society for Financial Education & Professional Development: A national leader in financial education, the society offers specific programs and resources to students transitioning into their post-graduation careers.


Debt.org: This leading debt-help organization takes a proactive approach to student finance, and it offers tips for college students on how to manage their finances.

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