By: Luis Enrique Diaz (adapted from Lauren Schwahn of Nerdwallet.com)
Creating a budget that accounts for textbooks, housing and other expenses can cut stress and over spending. It can also help shape healthy financial habits for the future!
Before creating your budget, be sure to factor in all of your potential income for the time you are building this budget for. Is anyone helping you finance your college career? Keep everyone involved with your finances in the loop by discussing the amount of money you will be receiving from them and the times that you will be seeing that money. This ensures that you will have all of your money accounted for. It also keeps your expectations in check!
Who is paying for college and how.
Have a conversation before the start of each school year to decide whether your family will pay for costs out-of-pocket or if you’ll need to get a job, rely on financial aid, or combine these options.
What expenses to expect.
In addition to tuition, you’ll have to budget for other college costs, like transportation and school supplies. Make a list of likely expenses, estimate the cost and agree who pays for what.
FAFSA and taxes.
Whether a parent or guardian claims you as a dependent or you file taxes on your own determines whose information is required to fill out the Free Application for Federal Student Aid, or FAFSA, and who can claim tax credits and deductions. Discuss your financial status before each school year and address any changes, like a raise or job loss.
Credit cards and bank accounts.
If you’re considering opening a credit card account for the first time, are younger than 21 and don’t work full time, you’ll need a co-signer: a parent or other adult. You’ll want to talk about ground rules, like using a credit card only for emergencies and defining what constitutes an emergency. Approach new financial products with caution and be careful not to take on debt. If you plan to directly deposit funds from a job or allowance, look for a checking account that offers low (or no) fees.
~ Follow this Step by Step Process! ~
Talk it out. Before building a budget, chat with everyone who will be involved in financing your education. Discuss who is paying, expected expenses, financial aid and perhaps opening a new credit card or checking account.
List expenses. Anticipate the costs of textbooks and school supplies, room and board, transportation, clothing and discretionary spending.
Track your spending. Once at school, monitor your spending. Determine needs and wants and decide which nonessentials you can trim.
Take budgeting to the next level. If you’re in good financial shape, start setting yourself up for the future. Create an emergency fund, for example, or plan for paying off student loans.
Keep your future self in mind
If you’ve managed to stay afloat as a student, you’re in good shape. Continue on a financially healthy path by thinking about life after graduation. If you’re working and able to build a cushion, set financial goals, like creating an emergency fund or saving for a trip — and don’t forget about any student loans you might have to pay off after graduation.
Refer to the links below for more information!
https://www.nerdwallet.com/blog/finance/how-to-set-financial-goals/
https://www.nerdwallet.com/blog/banking/life-build-emergency-fund/
https://www.nerdwallet.com/blog/loans/student-loans/student-loan-repayment-plans/