Most college students live on a shoestring and should be, especially if student loans are part of their financial aid for college.  Developing a budget will help you make the best use of the money that you have and help you avoid borrowing more than you need.  A budget is a spending plan for your money.  A well-planned budget will allow you to spend your money without worrying that you will not have money for the things that you need when you need them.  It's a simple process that has a big impact.  Here are 5 easy steps to get you started and keep you on track:

Step 1: Calculate your income.

Include money that you earn, financial aid, and money that you receive from other people (such as your parents).

Step 2: Calculate your expenses.

Include college expenses, such as tuition and fees, books and supplies, room and board (if you're living on campus) as well as other expenses, such as rent (if living off campus), utilities, groceries, car payment, insurance, phone bill, entertainment, car repair, etc.  If you're not sure exactly what you are spending (and most people are not), it's a good idea to track your expenses for a month or two by keeping a record of every dollar that you spend.  

Step 3: Categorize your expenses.

Decide which expenses are fixed, variable, and optional.   

• Fixed expenses are those that must be paid and the payment amount cannot easily or quickly be adjusted.  Examples would include rent and loan payments. 
• Variable expenses are those that must be paid, however, unlike fixed expenses, you have some ability to reduce the amount that you spend.  Examples would include utilities and groceries.
• Optional expenses are those that you may want but you do not need.   Examples include movies, concerts, and eating out.  Many purchases fall into this category.

Step 4: Make a spending plan (budget).

Use your income and expense information to prepare a college budget.  There are many online resources that you can use for this purpose.  FAME has an online Budget Calculator located in the Calculators and Tools page of the FAME Web site.  Don't forget to budget for savings!  It is recommended that you "pay yourself first" and save 10% of your income for emergency expenses you didn't plan for, like a flat tire or a crashed computer.

Step 5: Evaluate and adjust your plan.

Evaluate your plan every month and make adjustments as you need to.  This is where categorizing your expenses into fixed, variable, and optional will really help you.  Your categories will allow you to quickly see where you may be able to reduce your expenses.  The following money-saving strategies may also help you spend less and live within your budget: 

• Buy textbooks online at web sites like Amazon or even consider renting them.
• Have a roommate or two or three...
• If you have a meal plan at college, use it!  Avoid eating out.
• Decide if you really need a car, and if you do, consider carpooling with friends to share the costs.
• Give up expensive habits and save lots of money!
• Be a savvy shopper.   
• Only buy what you really need. Shop at discount stores and resale shops. 
• Consider buying in bulk - especially grocery items you use a lot of.  You may be able to share bulk purchases with a friend, saving you both money.
• Limit trips to the grocery store to no more than once per week and never shop on an empty stomach.
• Shop with a list and only buy what's on the list.
• Compare prices, purchase store brands, and use coupons 
• Look for low-cost or free fun such as hiking, biking, and free music events.
• Check out the costs of banking and shop for a bank (or credit union) that will offer you the services you need without additional costs.  For example, avoid paying ATM fees and checking fees. 
• Compare internet, cable, phone, and insurance costs regularly to make sure you're getting the best deal. 

Remember, practicing good financial habits such as budgeting and reducing expenses can have a huge impact on your finances while you're in college and for the rest of your life!  Visit FAME's financial education page for more money management resources.