Tag Archives: goals

Developing a Budget in College

After reading my financial aid posts, someone asked, well, how exactly do I budget while in college?

Determine Fixed and Variable Costs
For some students, it’s easier to keep a small notepad or journal to write down how they spend their money. The student may write down their expenses such as a cup of coffee, a meal, or a night out with his or her friends. This notepad is a great to carry around with you with your laptop or purse.

However, before the next academic year starts, sit down and develop a list of all of your fixed and variable costs. A fixed cost may include your tuition, rent or room and board, car payments, car insurance, parking fees, and health insurance that may not change month to month. Variable costs mean costs that vary every month. These may include entertainment, gasoline, food, utilities, hygiene, clothes, car maintenance, books, phone, and any dues.

Remember to be honest with yourself. If you buy a cup of coffee every day, or a pack of gum every week, it’s important to list them.

Determine Sources of Income
Income may include anything from a part-time job to allowances from home, grants, scholarships, or loans. When developing a budget, it’s important to develop an increment of time. For example, you may get paid monthly. Divide up your sources of income monthly to make it easier to budget. If you receive financial aid at the beginning of the semester, pay off your tuition/rent/room and board for that semester, and divide the rest of the money up into months.

Drafting a Budget
Draft a budget to see if it balances. Now ask yourself, do my expenses exceed my income? If your expenses exceed your income, it’s time to cut back or get a job. If you have money left over, think about investing or saving it in your emergency fund.

Remember to monitor your budget every month and to adjust the budget accordingly. Some budgets are not going to be the same month to month. For example, you may have to budget for a holiday or birthday one month, but in another month.

Also remember that your first budget may not be perfect. It’s important to use trial and error and get to a point where the budget works for you.

It’s important when developing a budget to include savings. It’s important to save at least 10% of your income.

Emergency Fund
As always, it’s important to have an emergency fund because you never know what’s going to happen. Your car may break down, or you need to take an emergency trip to a doctor’s appointment. These “emergencies” should NOT be put on a credit card. They should be apart of your budget.

Priorities
It’s always important to evaluate your priorities. Think about what’s important to you. Is it more important to have money saved up to start paying your student loans? Is it important to you to have money while you search for a job?

You can waste a lot of money in college and develop some serious credit card debt if you’re not careful.

Ask yourself, do I really want to be paying my student loans into my late 30s, my 40s or my 50s?

Think about how you spend your money. Do you buy coffee every day? Some places charge $4 for a drink. That will cost you about $120 a month if you buy it every day. Movies are also expensive. The average movie ticket is close to $10 now. When creating a budget, these should be rewards, not something that occurs on a regular basis. If they occur on a regular basis, how can they make you feel good? They become a standard.

Stay Motivated

It’s not easy to stick to a budget. It’s important to budget “fun.” It doesn’t have to be anything extravagant, but maybe a concert a month or a nice, sit down dinner a month. It’s your way of rewarding yourself for sticking to your budget. It’s just as important to have fun as it is to safe money.

Financial Aid, Part 4: Saving Your Money in College

Every situation is unique and different, but I want to discuss possible options for students to save money.

Ways to Save Money
Basic Savings Account
A lot of banks now offer ways for students to open a “student savings account.” The goal of a “student savings account” is to allow students with limited funds to open a savings account. They usually have low minimums and as a deterrent, it has penalties for withdrawing too much money.

Money Market Account
Usually have higher interest rates but require more of a student than a basic savings account.

Certificate of Deposit (CD)
This requires that you leave your money in the bank for a pre-determine period of time. In exchange for “lending” your money to the bank, you receive a promissory note that indicates the rate of interest you will earn on your deposit. However, if you need to take out a deposit on your CD, you may be required to pay penalties.

Money Market Fund
If students are interested in the opportunity to invest and explore the world of the stock market, this is a good option.

Spending Money Wisely

Textbooks
There are ways to save money in college. For example, buying used books may be a good way to save money. Some colleges even allow you to check out textbooks through the library (I wouldn’t always count on that though, if you desperately need that book before the final exam, it may be gone!). Maybe you can borrow the textbook for a friend, or search for the textbook on sites like amazon.

Transportation
If you’re close enough to campus, could you walk? Or how about riding your bike? Are their options for public transportation? In some areas, if you have a valid college ID, you can ride the bus for free.

Consider carpooling for class, and look for gas promotions (I personally love gasbuddy.com!)

Food/Meal Plans

How about food? It’s important to eat healthy in college. Meal Plans are great if your school offers them.

Try to not use your credit card for food purchases and if you can, clip coupons. Remember, just because an item is on sale at the grocery store, doesn’t mean that you need to buy it. Try to stick to a list of items that you need at the grocery store and only buy those items.

I found this neat website that you can eat cheap for $3.00 or less! Or this other website specializes in cheap cooking.
Farmer’s markets or other types of produce stores are usually a good way to save money, and the produce is fresher.

Get Organized

  • Always keep track of  your spending. Save your receipts and keep either your checkbook with you or a small notebook to write down totals.
  • Bouncing checks is costly, and may result in criminal charges.
  • Always remember to check your receipts to make sure that you weren’t overcharged.
  • Paying your bills on time also avoids any fees that may damage your bank account.
  • Plan your weeks ahead of time to avoid being bored and “spending” money on entertainment.
  • Plan your grocery trips ahead of time by creating a list of items that you’ll need. This will help you avoid a drive for an item or two. It’ll also help you plan out your meals better.

Leisure Time
Try spending your leisure time volunteering than out at the mall or other places you may spend money.

Always check to see if a place has a student discount. A lot of places such as museums, zoos, restaurants and movie theatres give discounts, even if it isn’t listed.

Shop Around
Always remember to shop around. If you’re shopping for a new computer or laptop, search the internet and store flyers for good deals.

Internet
If you have the option to, skip internet at home, if you’re close enough to your school or to a library that offers it to you for free.
Also, you can use free software like Skype to make computer to computer phone calls.

There are many ways to save money while you’re in college…

Live like a college student while you’re in college, but don’t force yourself to live like a college student the rest of your life.

Growing Up

College has been hard. Not only has it been difficult academically, but also financially. I was fortunate enough to live rent-free for a little over two years of my academic career, but the other two years, I had to fend for myself. It was important to my parents that I learn responsibility and independence. I’ve paid for most of my bills myself, including tuition and other expenses. Fortunately, I had several EE bonds that assisted me in paying for my tuition. I had to work hard for the rest of the money, though.

I hope that this history of my financial journey will better assist you in yours.

I made the decision to go to community college for my first two years to save money. I think that was the best decision that I could have made for myself. I saved money by attending there, my schedule was a lot more flexible to meet my work schedule, and the commute wasn’t too bad. The problem for me was transferring to a university where tuition was about 6 times as much money as I was paying at community college. I was forced to move back in with my parents and to commute to school. Although it’s been difficult, I’m here at the end, preparing to graduate with my undergrad degree. Obviously no two situations are alike, but I’m here to tell you that it’s possible. There are many grant, fellowship, and scholarship opportunities. I was privileged to have access to a lot of resources.

As I look back on what I’ve accomplished, paying for my education and other expenses has been extremely rewarding. Yes, it took a lot of discipline and I wasn’t always happy, but it’s also made me who I am today, very independent and money-conscious. Hopefully, those are skills that I’ll be able to use in the future.

I wrote this entry as a beginning of a series of entries on why it’s important to start early to think of your career pathway. I hope my story inspires you to share your own story and to give feedback. As I said earlier, no two journeys are alike, but I hope to give you the confidence to achieve your goals.

What are you going to do with your tax return?

Hopefully, most of you are getting money back this year from your tax return. If so, what are you going to do with the money? I know several of us (myself included) look forward to getting our money back every year, but are we spending it wisely?

I notice some of my friends put the money towards a large purchase, such as a TV or clothes, but is that really a good idea? Of course, I cannot tell you what to do with your money, I’m just giving you some food for thought. I’ve come up with a list of alternatives to spending your tax return money on disposable goods such as TVs and electronics.

My first question will always be, do you have any debt you need to pay off, such as a loan or a credit card? Think of how much your tax return can help you with that.

Do you have an emergency fund? It’s always a good idea to have at least 3 to 6 months of living expenses in a bank account, short-term CD or a high-quality money-market fund. It may be a good idea to start an emergency fund if you do not already have one in place… and if you do, why not add to it?

Or have you thought about investing the money or putting it in savings?

How about a step towards retirement? You may think your tax return is only a drop in the bucket, but think of how you may be restoring your 401(k).

How about buying a government bond? The current interest rate through April 30, 2010 is 3.36%. If there are any interest on I Bonds, it is added to the bond monthly and is paid, to you, when you cash the bond. It may earn interest for up to 30 years… and after having it 5 years, there is no penalty if you cash it. If you pay $50 for a bond, you’ll get AT LEAST $50 back. The disadvantage is, of course, if you need the money immediately.

Education? Maybe put the money towards something like your education or an education for our children. It could make you more marketable and make you more money, or it may give your child the chance at a quality education.

As much as that new LED-LCD screen may seem like an instant reward, think of how rewarding it is to pay off your debt sooner or to finance your child’s education. I challenge you to think about what’s best for you in the long-term, not what is going to give you instant satisfaction.