How to Balance Your Personal Budget in College

Author: Bill Zheng
Published: 9:17 PM, August 13, 2020

    For many, it is hard to achieve a balanced budget in college without incurring much debt. Here are ways that you can balance your budget, and these tips can be used for the entirety of your college.

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Why Debt is Detrimental to Your Future?

    While borrowing student loan sounds nice in the short term, one must know that debt is not the solution if you wanted to reduce it. A debt that you have incurred this year will increase each year by the Annual Percentage Rate (APR), and the compound interest made paying off the debt in the long run extra hard as the debt you owe increases exponentially. Even though you can try to find a good deal to borrow the debt, in most of the cases, it is better to prevent incurring any debt instead of finding ways to pay them off.

Ways to Generate Income:

    There are two main sources of income that you can generate income in college: being employed or freelance. Make sure your job is part-time, since you should make sure that your job's workload would not exceed your college's workload. An optimal time of part-time work in college would be 12 hours per week according to this blog post.

How Would You Freelance?

    In terms of freelancing, you should play it to your strength. This depends on your major and your career choice you chose or recommended by our College Calculator, but here are some examples: if you are a computer science major, you can make some extra cash if one of your friends has a nice internet startup idea, or you can make graphic designs for a friend in an arts project. You could even be more creative, and do what Elon Musk did. Compared to a part-time work, which will give you a fixed return, a freelance job has a more uncertain income. If you feel certain that your skills will translate into more income, then you should prioritize in freelancing, if not, then stick with part-time work first.

Elon Musk famously rented out his college frat house to pay his rent

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How can You Borrow Less Money

    Do not be afraid of applying financial aid, especially in this period. Most schools are need-blind, which means that they will not take your financial aid status as a part of your application process. However, there are schools that are more likely to reject you because of your financial needs since they are not need-blind. Even though you might have a harder time applying to it, it doesn't mean that you are out of your chances! You can still apply to your dream school even if it is not need-blind, but you have to make sure to pick up some backups.

    Besides from asking financial aid or scholarship from the school, you can also apply for them in other organizations. For example, the federal government offers student financial aid in the name of FAFSA, and you can apply to it right here.

    It is extremely important to remember borrowing less equals paying way less due to the exponential growth of the debt that you will incur, and with the methods above, you can find ways to balance your budget more. Although I cannot boil it down to a specific number, using all of these will bring a positive effect to a certain degree no matter what.