About Money: A Student's Struggles with Lump Sum Income

A.M. Swearingen

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Everyone tells you the same thing when you’re trying to start a budget: Find out how much you spend a month, find out how much you make a month. If the former exceeds the latter, you have some work to do financially.

Except, how do you budget when your life isn’t sectioned off into months?

As a college student, your life is sectioned into semesters of approximately fifteen weeks, and so are your finances. If you’re like me, you depend on lump sums of money that you receive at the beginning of each semester, supplemented by a job (or two, if you can handle it) for living expenses like groceries, rent, transportation and more.

Now, you might say, “What’s so difficult about that? It’s only a little bit of math and you have a monthly income.” This is true. But the further into the future you look, the harder it is to predict what your spending is going to be like. You probably know what your fixed expenses are going to be in the next semester, but variable expenses are going to be a lot harder to pin down.

And don’t forget, a lot of the time, the disbursement money you get from school loans actually has to last you longer than the school year. You have to remember to include the summer months when you divide up the disbursement money you receive from the school. That’s another three months of rent, amenities, transportation and living expenses.

Other expenses that students accrue which are frequently glossed over by the rest of the post-school world include books, entertainment, travel expenses, and moving expenses. I’m 25. In the past seven years I’ve moved in and out of dorms and apartments nine times. Sometimes friends and family were able to help me—sometimes they weren’t, and I had to hire movers. People don’t talk about it much, but being a student puts you into a volatile living situation.

Thankfully, that’s one of the better features of lump sum incomes. You have all your money right there when you need it, so if something comes up that you didn’t anticipate, like moving, you have the money for it. This is handy for emergencies — but keep in mind that the money you spend on emergencies isn’t going to be there for paying rent when you need it three months down the line.  

Basically, lump sum disbursements take a lot of self-discipline.  You can put the entire lump sum into savings and allot yourself a specific spending amount (according to your budget) that you transfer to your checking at the beginning of each month. If you feel comfortable with keeping the lump sum in checking and relying on your own restraint—more power to you.  

As for those life emergencies — and they will happen — having a plan in place can really minimize stress.  Maybe you know someone who can tide you through with a personal loan.  Maybe you can tighten your belt in the personal spending department.  Maybe you could actually set up an emergency fund ahead of time, just like the financial gurus say you should.

Sad to say, student finances aren’t as straightforward as we’d like them to be. Life is supposed to be simpler when you’re a student because you’re not “in the real world” yet. And in some aspects, that’s true. In other areas, like money, it’s actually more complicated to do simple things—like trying to budget.

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