Seniors: Keeping track of your everyday costs can be mind-boggling for students not particularly savvy at organization.
Financial preparation is one of the most valuable assets you’ll ever learn. It not only teaches you irreplaceable skills, it also paves your bright path to adulthood. A solid foundation will secure your independence. No ambitious college-bound student would want to rely on their parent’s meager allowance forever. The earlier you begin financial planning, the better!
If you create a clear-cut budget and stick to it, you’ll stay far ahead in the “paying for college” game. But you may agree this all sounds wonderful and still ask yourself, “Where do I start?” Follow these five steps and you’ll map out a game plan for your budget, monthly costs and how to pay for your overall college expenses:
- Pick a School. Determine which school you plan to attend and when you hope to start.
- Calculate Expected Costs. Make a list of all set (e.g. rent) and variable (e.g. entertainment) expenses, then estimate your average monthly cost of living. If possible, include an emergency fund.
- Construct a Monthly Budget. Using a budget worksheet will help (the University of Illinois provides a straightforward one, but there are many more circling around cyberspace). If needed, consider ways to lower college costs. Then determine what to include when creating a budget for college expenses.
- Determine Fund Sources. Money for school can come from any number of places. Be sure to explore all your options (parents’ savings, parent income, student income, grants, scholarships, other sources). Keep in mind all federal loans require a payback with interest. Weigh the possibility of a subsidized or unsubsidized loan. If those aren’t the right fit for you, check out private loans. PLUS loans are also available, but should only be considered after you’ve exhausted all other options.
- Calculate What to Borrow. Available Funds – All Expenses = Your Projected Monthly Income. This will give you the maximum amount that will need to be borrowed.
Once you’re done creating a budget for college, the real challenge lies ahead: being consistent and staying on track. Limit your use of credit cards to emergencies and planned expenses. Track your spending closely and be wary of peer pressure.
Little changes will add up to sizable savings, if you know where to shrink otherwise unnecessary expenses. For instance, your instinct may tend to crave a fragrant blended coffee as you pass by Starbucks, but brewing a cup from home can make a difference of a whopping $3. It may seem trivial, but when you’re on a tight budget (and an admittedly avid coffee drinker, to boot), it adds up quickly. That coffee substitution alone would save you around $20 per week and $80 a month. Take a look at this handy infographic from USA Today College for more money-saving tips.
Part of the experience of college is to prepare you for real life. Forming good habits with money now will help you in the future. Even if you’ve already begun digging yourself in a seemingly endless financial hole, it’s never too late to establish mindful saving habits. So why not start now?
Photo Credit: Tricia Adams