Personal Budget Guide

Despite the fact that budgeting is a crucial part of financial management, CNN reports that only 41% of Americans create and maintain a budget. Most Americans have less than $1,000 in savings and cannot cover a $400 emergency. Students face additional financial challenges, since they must cover both college costs and normal living expenses. According to the American Psychological Association (APA), money ranks as the second-highest stressor for students, just after academic responsibilities. However, creating and maintaining a budget can significantly ease this stress.

Counseling students face additional financial challenges since counseling programs typically require unpaid internships or field work. The APA reports that many psychology students struggle discussing finances, since money is often a taboo subject in the mental health field. Mental health professionals are often expected to sacrifice their financial well-being to help others and promote social justice.

Establishing a budget can help counseling students keep their finances in order while completing their studies. Budgeting can reduce impulsive spending, decrease student debt, save money, and clear more time and energy for your studies. This guide provides information about how to track your spending, maintain your budget, and cut costs in college. The page also outlines budgeting terminology and other financial resources for students.

Getting Started

Budgeting Terminology


Total Income: Your total income refers to the total amount of money you earn on a regular or irregular basis. For students, total income includes financial assistance from family; wages from work; and financial aid such as loans, scholarships, and grants.


Monthly Income: Monthly income includes the total earnings you receive every 30-31 days, usually from a job. Some monthly incomes are fixed, while others vary depending on the number of hours you work each month.


Discretionary Income: Discretionary income refers to any income remaining after individuals subtract their essential expenses from monthly income. Discretionary income can pay for personal expenses such as entertainment and clothes.


Essentials: Essential expenses are absolutely necessary for living and studying. Essential expenses include food, gas, rent, mortgage, utilities, and school supplies.


Nonessentials: Nonessentials are peripheral personal expenses. These include dining out, going to concerts or the movies, traveling, buying extra clothes or books, and other extraneous activities.


Fixed Expenses: Fixed expenses generally cost the same amount each month. Fixed expenses include rent, mortgage, tuition payments, insurance, and phone bills.


Variable Expenses: The cost of variable expenses fluctuates each month. Variable expenses include both essentials, like groceries and gas, and nonessentials, like dining out.


Emergency Funds: Individuals set aside emergency funds for unexpected life events. Emergency funds should only cover necessary expenses like trips to the emergency room, car maintenance, or sudden periods of unemployment.


Track Your Spending


  1. Assess Current Financial Spending: The first step in tracking your spending is to assess your current financial situation. You can find monthly bank or credit union statements online. These statements can give you a better understanding of where your money goes each month. Make a list of all of your monthly expenses.
  2. Categorize Expenses: After writing down all of your monthly expenses, group the items according to whether they fall under essentials or nonessentials. Essentials should include fixed expenses like rent, mortgage, insurance, and tuition payments. Essentials also include a few necessary variable expenses, including groceries, transportation, and utility bills. Be sure to include books and school supplies in this category. Your nonessentials category will most likely include expenses from activities like dining out and shopping.
  3. Do the Math: Once you've created these lists, add up all of your essential expenses. Subtract this number from your monthly income to find your discretionary income.
  4. Create Your Budget: You can use the discretionary income you calculated in step three to pay for extraneous items and activities. If this number is negative, you most likely spend more than you earn each month. Students who rely on loans commonly struggle with this problem. To boost your discretionary income, focus on cutting costs. For example, you might choose a cheaper phone plan or rethink your meals to cut back on groceries. The "tips for cutting costs" section below offers more tips.

Financial experts generally recommend the 50/20/30 rule for budget planning. According to this rule, 50% of your income should pay for essential expenses, 20% should go toward savings, and the remaining 30% should cover nonessential expenses. While this rule provides a useful general framework, each individual must find the right budget for their unique financial situation. Many students, for example,cannot save 20% of their income while in school.

Maintaining Your Budget


After you create a budget, you should regularly review and update it based on any changes. Many financial experts agree that maintaining a budget requires flexibility, daily attention, and commitment. These practices prevent other unhealthy financial habits such as overspending, overdrafting checking accounts, and accruing credit card debt. Regularly reviewing your budget can also help you establish long-term goals and prepare for unexpected financial situations that may arise in the future.

Be sure to go over your spending at least two or three times a week, if not every day. Try to update your budget once a month. Even if you have not experienced any changes in income or spending, a monthly budget update helps you reflect on new ways to cut costs and save money. The list below describes several helpful tools for maintaining your budget.

Budgeting Tools


Left to Spend: This simple smartphone app keeps track of your purchases. Each time you record a financial transaction, the app lets you know how much spending money you have left.


Microsoft Excel: Individuals, businesses, and organizations use Microsoft's spreadsheet software to manage finances and data. Excel and other spreadsheet applications such as Google Sheets organize all of your budget information in one place. This tool allows you to track spending, organize financial goals, and calculate how much money you have left. Some spreadsheets also analyze this data for you.


Mint: Offered through Intuit, Mint focuses on streamlining financial information. This money management app tracks bills, creates budgets, generates free credit scores, and tracks investments. The app also provides convenient alerts and financial advice to help you keep tabs on your money.


Personal Capital: Personal Capital offers a suite of financial tools focused on tracking investments and generating wealth. Users can link all of their financial accounts to Personal Capital in order to calculate their net worth. Personal Capital also builds long-term investment plans, analyzes portfolios, and creates personalized retirement plans.


Simple.com: Simple is an online banking system based in Portland, Oregon. This company provides mobile banking without any fees. After opening a Simple checking or savings account, you can create a budget, save money, set goals, and keep track of spending money.


Wally: An international financial app for iPhones and Androids, Wally helps you track spending and saving. Users can create budgets and set financial goals. Its simple interface provides a visual overview of all of your financial information.


YNAB: YNAB stands for "you need a budget" This personal budgeting software focuses on reducing financial stress and eliminating debt. YNAB helps its users practice smarter money management through four simple principles: intentional spending, planning for the future, financial flexibility, and savings. The software costs $7 per month.


Tips for Cutting Costs in College

  • Adopt Healthy Spending Habits: Learning healthy spending habits in college sets you up for financial success later in life. This practice also helps you spend discretionary income without feeling guilty or stressed about how much money you have left. Healthy spending habits include using credit cards responsibly to build credit, paying off your debt quickly, and tracking your spending. Spending Tracker, Habitica, and Slice offer useful tools for smart shopping, money tracking, and other healthy financial habits.
  • At-Home Meal Preparation: Preparing your meals at home rather than dining out is one of the easiest, fastest ways to save money. CNBC reports that individuals who eat lunch out every day spend around $2,500 per year, while those who bring lunch from home spend nearly 50% less. Busy counseling students can prep their meals at the beginning of the week to avoid impulsively buying meals out. Additionally, meal planning reduces food waste and optimizes ingredients to save even more money. These meal planning apps can help you get started. For those occasions when you do eat out with friends or family, apps like CheckPlease Lite help you split the bill and calculate tips.
  • Use Student Discounts: Many schools, businesses, and organizations understand the financial challenges students face. Consequently, local restaurants, coffee shops, bookstores, gyms, and other businesses often offer student discounts. Your school most likely also offers free services and activities. Look into your school's student organizations to find free campus events, outdoor activities, counseling, academic coaching services, and other resources.
  • Find Cheap Textbooks: While new textbooks cost an exorbitant amount of money, used and rented books often cost much less. Your school library might keep copies of the books you need. Library copies are often limited, so be sure to check out your books as soon as possible. Websites like StudentRate Textbooks and Textbook Me allow students to find discounted books by comparing prices. Your school's student portal might also feature a discussion board where students can post about selling and buying books and other school supplies. Finally, many websites allow you to purchase e-books, which tend to cost much less than hard copies.
  • Graduate Earlier: Instead of paying for four or more years of college tuition, many students find ways to graduate a few semesters or even years early. Some students earn college credit while still in high school through advanced placement or community college classes. Additionally, many students take more than the minimum 12-credit course load each semester. Apply to colleges with strong student graduation rates and avoid changing majors.

Additional Resources


StudentAid.gov: This U.S. Department of Education website provides an overview of financial aid for students across all academic disciplines. Use this website as a starting point for learning about many different types of financial aid.


WayUp: This job search engine helps students find and apply for internships and entry-level jobs. WayUp also offers several career resources, including resumé building, cover letter writing, and interviewing.


American Psychological Association: In addition to its resources for mental health professionals, APA provides many resources for current students. The website features an internship search engine, information about paying for grad school, a list of scholarships, and a funding search tool.


American Counseling Association: The ACA offers a special student membership and several financial resources. Members receive discounts through several businesses and organizations. Members also pay reduced rates on professional liability insurance.


Consumer Financial Protection Bureau: Students can use the CFPB's website to compare financial aid offers and learn about banking, loans, and debt. The Know Before You Owe program provides a federal aid shopping sheet and encourages students to learn financial literacy before taking out loans.


PayScale: PayScale offers specific financial information for careers in counseling. Students can use this website to research salaries for the different types of counselors and other mental health professionals. Students can also use PayScale to search for jobs and internships.


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