Budgeting for the College Student

1. Budgeting for the College Student Designed by Regina Crews, Secretary of Student Support Services

2. Learning the Hard Way The cost of higher education is expensive and getting more so. Students believe they can spend now and make up for it later when they�ll have a good job. Students are usually surprised at how much the little expenses add up. A cup of coffee at the local coffee shop before classes each morning can total $46 a month or nearly $200 a semester. Smoking is one of the most costly habits. At $3.50 a pack, a pack a day habit can total well over $400 a semester. It doesn�t take much to reach thousands of dollars a semester on incidentals. But being a college student doesn�t have to leave you penniless, if you�re smart. You can learn to live on a budget.

3. The Basics of Budgeting The basics of budgeting are the same for students as they are for anyone else: List the source of your income, such as savings from a summer job, income from a present job, financial aid, money from parents, etc. List your expenses, such as tuition, books, groceries, gas, entertainment, child care, in as much detail as possible. Compare your income to your expenses. If your expenses are less than your income, you are in great shape as long as you stick to your spending plan. If your expenses are more than your income, you need to find ways to cut spending or increase your income.

4. Better Living Through Technology Getting your budget under control means you need to take a look at how you spend your money. Not knowing exactly where your money is going is not an uncommon thing: cash machines and credit cards can feel like free money. When it comes to ATMs, you should withdraw only what you think you might need. The ATM can have another hidden disadvantage: ATM fees. Most banks charge a surcharge of $2 for each transaction, but it is not uncommon for some banks to charge as much as $10. Those fees can add up over the year. Just two fees a month will add up to $48 at the end of the year. Getting a credit card in college is easy. Many companies offer limited credit lines with high interest rates and do not require a minimum income. Credit card companies bombard students with applications for credit because they know that today�s students will become tomorrow�s accountants, doctors, and lawyers. The earlier they get students to use credit cards the better for them. Like ATM cards a credit card can seem like a salvation, but they can be your worst enemy if you do not use them wisely. If used wisely, credit cards can lead to a respectable credit report and make it easier to purchase a home or a car after school is over. If used haphazardly, a credit card can also get you into big trouble. The best thing to do is to pay off your balance monthly. Just paying the minimum payment each month adds substantially to the balance through interest.

5. Learn Good Budgeting Habits Try to pre-pay the fixed expenses. The develop the right spending habits to manage what�s flexible. Take 20 minutes a day to mentally walk through your college day. Will free periods involve any expenses? What are your typical weekend plans? What might they cost? Keep a journal. Record your money habits for 3 days. Write down every penny you spend. See how much goes to newspapers/magazines you never read, cigarettes you shouldn�t smoke, and take out food. Create a chart of your spending habits. Make a budget using percentages, not dollars. If you have $150 a week to spend and $50 is spent on food, that�s one third of your expenses. Visually calculating your spending has a profound psychological effect and leads to more savings with less frustration than counting pennies. Never make a final budget until after the first two months of college. You can�t really judge needs completely. If at all possible, you should take a job that will enhance your future career. A volunteer job at the hospital will get the budding nurse further in the long run than a job asking, �Do you want fries with that?�

6. Second Hand Chic If you choose used textbooks over new ones, you�ll save money. Most college bookstores offer to buy back used textbooks. You can sell other items that you no longer use, such as furniture or clothing. Look for bargains or sales, but only buy what you need. Shop where student discounts are offered. Try to carpool to school or other places. When running errands figure out a route that will get you everywhere you need to go without going back and forth across town.

7. 12 Money-Management Tips for College Students Track it � Track your money for two to for weeks to find out where your money is going. Get a plan � The best way to manage your money over the course of a semester is to sit down and map out a budget. Good time money � If you know you need to buy a new CD or go to a concert or a party every week, make room for that in your budget. Pace yourself � If you spend too much at the beginning of the semester, you could be tapped out later. Give yourself a spending limit for each week. Stick to it and you won�t have to eat macaroni and cheese every day the next month. Go easy with the credit cards � One quick way to spend beyond your means is to charge it. Use credit cards sparingly. Set your own credit line � Afraid you�ll spend as long as there is room on the card? Call your credit card company and request that your credit be lowered. Credit card companies will try to raise your credit lines so you can spend more. Tell them no each time they try.

8. Get real � You can do what you want, but you can�t do everything you want. You�re going to have to make some choices. Whatever you choose is going to cost money. Be realistic. Stuff happens � If you bust your budget on something you really want to do this week, make up for it next week. Look ahead � If you know a big expense is coming, start putting money aside for it. Split expenses with a roommate. Talk about how much each of you will pay on expenses. Spread it out � Most of the big expenses are at the beginning of the school year. Buy items as you need them. That will spread out expenses. Ask for help when you need it � It�s very difficult to say, �I need help.� Find the courage to call a friend or family member and ask for help. The longer you put it off, the worse things can get.

9. You Are Not the Only One Struggling to Make Ends Meet The majority of college students are struggling to manage their money. 67% of college students in 1995 had credit cards and the average balance was $2100. The time at college is an ideal opportunity to learn how to manage money. Knowing how to manage money will become increasingly more important in the future. College students either have or will in the future learn to use spreadsheet programs to help them budget their money. It�s not fun an it�s not pretty, but it can save you from years of trying to climb out of a financial hole. Developing good money habits now will pay off big later.

10. Internet Sites with Information on Budgeting The Dollar Stretcher Household Budget Management Budgeting Links Smart Money: Your Budget Shoestring Budgeting Budgeting: The Basics and Beyond Money Master

11. Thank you for your participation in this workshop. We hope you found it helpful. Do not forget to complete an Academic Enrichment Summary. If you are viewing this workshop via the internet please come by the Student Support Services office to complete an Academic Enrichment Summary or you may click on the link in the instruction box on the Workshops page and print one out or e-mail it to rcrews@wallace.edu so that we may document your participation. Handouts available upon request. EXIT