When students go off to college, they may quickly encounter financial challenges never faced previously. Or at least not experienced apart from parental assistance. Quite suddenly, college students are dealing with tens of thousands of dollars annually, money that pays for tuition, room and board, covers the purchase of books and provides funding for related expenses. To manage all that, a budget may be necessary, thus our following guidance is with the college student in mind.
You may not be working while in college, but there are income sources you are tapping to cover your expenses. This category is very broad and can include the following: college scholarships, federal Pell grants, personal savings, a college savings account, gift money and the contribution from your parents.
Add up the money that you have coming in as this will provide the basis for establishing a budget. Don’t forget to include interest earned on savings accounts as well as money you may earn from a part-time job.
Planned or fixed expenses are those costs that you know that you will incur throughout the academic year. These include what was mentioned in the opening paragraph as well as your college meal plan, the insurance and expenses for keeping up your campus car if you have one, and personal health insurance if you are not covered under your family’s plan.
Other fixed expenses include your textbooks, learning supplies and perhaps an emergency fund to tap as needed. Include incidental costs such as checking account fees and credit card expenses, although you can eliminate these costs by opting for a no-fee college checking account.
Beyond fixed expenses, there are some costs that are flexible or what you may or may not incur any semester. These expenses include computer equipment, peripherals and supplies; your smartphone; groceries and restaurant meals; and snacks.
Your entertainment costs should be included here. These costs are made up of movie tickets, sporting events and other costs associated with your social life.
Personal care purchases are also a flexible expense and include clothing, haircuts, laundry, toiletries and prescription medicines. Add in your transportation expenses such as student partaking, bus or train fare and airfare to return home.
Income Versus Expense
A simple budget will have you add up the amounts in your two categories, combining your planned and flexible expenses to figure out what you might spend each year. If your expenses are less than your income, then you are living within your means. If your expenses are greater than your income, then you are coming up short and will have to look at some options to balance your budget.
Students faced with a financial shortfall must examine what options are available to them and take one or more approaches in closing the financial gap. For one, you can increase your income by holding down a part-time job. You can also seek additional scholarships or perhaps receive increased gift money from your family.
Cutting expenses can also help you balance your budget. First, rent your textbooks instead of buying them. Second, choose a meal plan that is the most cost effective and use it. Third, control your entertainment costs by sticking to a set amount of "mad money" each month — when the funds are used up, they are gone. Fourth, select a monthly fare option when using mass transportation. Fifth, if possible leave your personal car at home. Owning a vehicle when living away at college is just one more challenge you will face as you seek to balance your budget.
Closing The Gap
If you still are coming up short, you have some other options to choose to help balance your budget. These options include students loans, both federal and private loans that you will have to pay when you complete your education. Keep in mind that these loans will put you in debt, therefore borrow money only as a last resort.
For some students, their choice of college will play an important part in balancing a budget. If you cannot afford a school, going with the more cost effective option may be right for you. You will stay get the education you need, but without the financial burden that can weigh on you years after finishing college. Lastly, avoid using credit cards to fill in the gap — high interest rates and ongoing payments are a real budget buster.
Jenny Sampson is a professional blogger that enjoys providing consumers with personal finance advice. She writes for TitleMax.biz, a leading Title Loan company offering loans for people with bad credit.