When packing for college, pack a budget too
College is already expensive enough. Manage your spending and avoid trouble by preparing a realistic budget before leaving home.
For many recent high school graduates, August means packing up and heading off to college. It is wise for a college freshman to also pack a budget.
College is a new and exciting experience with lots of firsts. Managing your own money may be one of those firsts and preparing a budget is the smartest way to handle the responsibility. Michigan State University Extension suggests thinking of a budget as a road map; a plan of where you want to be financially. Similar to a real road map, it can be revised as the situation dictates. Follow these recommend steps to save yourself from the headache. Your bank account will thank you!
Step 1: Start with a budget template that allows you to list your anticipated income and expenses; you can find several options online by using the search term “college budget template.” Most templates divide your income and expenses by month. Select the one that best fits your situation.
Step 2: Identify all the sources of income you will have during the coming year in college. Will you be working? Do you have savings or a college account you will be drawing from? Do you have scholarships, grants or loans? Will your parents be contributing? Insert the amounts so you have a clear picture of the funds you have to work with.
Step 3: Now fill in your expenses. Start with school expenses such as tuition, books, fees and supplies. Then consider your living expenses; include room and board if living in a dorm or rent and groceries if not. The template will give you a long list of items to consider, some of which will apply and others that won’t but it is better to consider many options than to miss an important expense like insurance (health, renters and car) or an emergency fund.
Your budget should be as straightforward and realistic as possible. It is better to overestimate and have money left over than to run short.
Step 4: Review the list and see where you may be able to cut your expenses. For example, you may decide that you can take public transportation and avoid the expense of having a car on campus (considering the cost of gas, maintenance, insurance and monthly car payment). The sacrifice may sting a little less when you consider the other things you may be able to do with the money you save.
Step 5: Finally, determine how much money you can spend on entertainment and other wants. Take into account eating out, sporting and music tickets, fees for organizations you may join and any anticipated travel. Realize that these are “frills.” Spend wisely and enjoy knowing you can afford to splurge because you are staying within your budget.
It may take a full year to figure out your spending habits and that’s okay. If you are keeping good records the process of creating a budget will be much easier the next time. And learning how to do this early in college will establish good habits for the rest of your life.
You may be the only person on your dorm floor that is following a budget, but you can relax and enjoy the experience of college knowing you don’t have to worry about money. You have wisely planned ahead of time how you will manage your funds.
For more information about managing money and creating a budget, check out the National Endowment for Financial Education’s High School Financial Planning Program. To invite an educator to speak to a group of youth about money management, contact your local MSU Extension office.