Create a Budget for College
Careful planning can help you graduate debt-free
One of the best things you can do when you are in college is to create a budget for the school year. This may be the most important step after graduating from high school. A college budget is similar to an annual budget, but it is designed specifically to help students deal with the varying costs of tuition and expenses throughout the year.
When you do this, you can have a set earnings goal that you work toward each summer. If you need to work during the school year to supplement your income, you can plan ahead and schedule your time effectively. A college budget can help prevent you from making the most common college financial mistakes, from misusing your loan money to ruining your credit, and graduate debt-free.
List the Cost of College
When you are a college student, your biggest expense is likely your tuition costs and the fees associated with going to school each year. If you are living in the dorms, your housing costs will be set up as an annual cost, too.
The best way to start this budget is by listing these costs first. If you have one, you can also include your meal plan in this initial tally. Estimate the cost of books and materials for each semester, and add that in as well.
List Everyday Expenses
Next, you need to list the cost of your monthly everyday expenses. If you are living off campus, this can include rent, groceries, and utilities. You will need to create a category for clothing, entertainment (movies, weekend plans, parties, spring break trips), transportation, and other expenses. It is important to budget for everything on which you plan to spend money.
When creating these categories, you can estimate your monthly budget amount and then multiply it by the number of months you will be away for college. Then add in annual costs like spring break or Christmas presents. Avoid signing up for monthly contractual obligations that require you to buy out the contract to cancel them. These might include a television package, a gym membership, or a cell phone plan. You can often find monthly gyms and cell phone plans, as well as apartments that include utilities and cable.
Create a Total for the College Year
Next, you need to add these totals together to determine the total cost for your entire year. Now you know what you will need to survive for the school year. This total figure will give you a definite goal to work toward with your summer job and other jobs.
When you look at the total cost, you may be a bit overwhelmed. Take time to evaluate your summer job and whether it is paying you enough to cover college expenses. Can you find a job that pays better, or work two summer jobs? Otherwise, may need to consider working during the school year.
Determine How You Are Going to Find the Money
It is important to consider all of the options available to help you pay for school. Your income list can include college savings, summer job earnings, part-time job earnings, scholarships, grants, and students loans. Student loans should be your last resort and only used to fill in the gaps if you run into issues earning enough money. If your parents have saved money for you for college, be sure you divide that over your total time in school. It's also worth the time and effort to look for scholarships through private organizations or to look into tuition reimbursement through your job.
It's important to make the most of your summer job, so you do not need to work as much during the school year. If you do plan on earning money each month to supplement your other earnings, estimate on the lower end, because you may not be able to find a job that pays as well or has the hours available. You should also avoid working so much that your schoolwork suffers.
Follow Your Budget
Once you have outlined your expenses, the next challenge is sticking to your budget. Since you will have saved up a lot of the money or you will get your student loan or grant in a lump sum, you need to be sure that you parcel it out correctly. Choosing the right accounts for a college student will make it easier to separate the money into monthly amounts.
Determine the amount you will transfer into your checking account each month to cover your monthly expenses and then leave the rest of the money alone. Avoid dipping into it outside absolute emergencies, or you might spend the last two or three weeks of school starving because you have run out of money for the semester.
It is important to find a balance between graduating quickly or moving more slowly so you can work and graduate with less debt. Your college budget can help you do that. Be sure to keep looking for ways to save on your daily expenses to help you reach your goals.