Earn an “A+” in Budgeting
Written by Lisa Phelps
Going off to college is probably one of your first big solo adventures. Along with the freedom to make your own decisions comes the responsibility of having to manage your money. You may excel at this - or you may struggle like I did.
We’ve got some great advice on ways to earn an “A+” in financial management, and it all starts with:
Creating a budget.
But it’s not enough to simply create it, you must stick to it as well! Write down your recurring monthly expenses and income and then calculate how much money you have to spend each month or each week. The more detailed the budget the better, so don’t forget to include small things like movie rentals, fast food stops and online music purchases. Think carefully about everything you buy and write it into your budget.
Some of your recurring expenses are fixed, like your cell phone bill and rent, while others vary. These can be harder to work into your budget, so always estimate high so you don’t come up short at the end of the month and be unable to pay a bill.
Here are some of the variable expenses that you can reduce while you’re in college:
Room and Board — are they cheaper on or off-campus? Keep in mind that if you live in an apartment, you’ll have to buy your own food and cook it, meaning you might be tempted to eat out more often (which can get very expensive). You'll also be responsible for paying your utilities. Be sure to look at the finances of each option carefully before making a decision.
Books — one of the largest expenses you’ll have at school. Save money by buying or renting them used and online.
Laundry — detergent and money for the machines can add up fast. If your parents or relative live near by, ask if you can do your laundry at their home, which saves you money and the hassle of having to do it in the dorm or at expensive laundromats.
Food and Drink — restaurants, fast food, take-out, vending machines, fancy coffee, etc. These seemingly small expenses can add up very quickly, so you should strictly limit how often you indulge. An on-campus meal plan may be your best option to keep expenses down. The key is to use it as much as you can and make sure you’re not paying for more meals than you’ll use.
Being on your own also means you’ll probably have bills to pay. A scary thought perhaps, but they can be easily managed online or on your cell phone. Just be sure to choose a bank or credit union that offers great money management features including online bill pay, text alerts, mobile check deposit and peer-to-peer payments. These convenient features will make managing your money easy.
Finally, being smart with your money includes understanding all the details of your federal and private student loans. Here’s what you need to know:
Your Direct Loan will be disbursed directly to your school and will cover an entire academic year. It will pay for tuition, fees, room and board and any other authorized charges.
Extra money from your loans is given directly to you from the school to help pay for any other education expenses you may have, including books, supplies, a computer or transportation.
If you’re using loan money to pay for an off-campus apartment, be sure to budget carefully so you won’t fall behind on rent. Equally important: pay on time, every time! If your landlord reports this to the credit agencies, this can have a positive effect on your credit report, too!
Interest payments are deferred on Direct Subsidized loans, but not on Unsubsidized or private loans. Be sure to enter due dates for your loan payments in your budget and on your calendar so you never miss a payment. And if you can, start paying even small amounts toward your loans to help lower your overall interest payments.
Stick to your budget, manage your money wisely, and learn how to separate your wants from your needs. That’s the best way to earn that “A+” in personal financial management!
Learn more about creating and following a budget from iGrad.
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