You are probably thinking that financial aid will cover all your expenses—and it may. However, are you aware that almost 60 percent of financial aid for college is in the form of loans? That’s money that you will eventually have to pay back with interest, so it’s extremely important that you borrow only what you need.
Plan for: college costs
Let’s start the process of budgeting with a pen and paper—go ahead and get yours.
Start with these costs:
• Tuition and fees
• Room and board
Enter the amount of housing and your meal plan.
• Transportation costs
If you are commuting, you will have car expenses, like gasoline, insurance, licensing fees, a parking pass, and repairs. If you are living on campus, will you take a car to school? If so, add those expenses to your budget.
• Cell phone
• Books and supplies
The Office of Financial Aid can give you an idea of what it will cost per semester for school supplies.
• Ongoing expenses, such as a credit card bill
Plan for: savings
A prime rule of budgeting is to “pay yourself first.” It is extremely important that you get into the habit of systematic saving, no matter how small the amounts. That way, when an unforeseen emergency comes up, you are prepared and won’t have to borrow money to cover that expense.
Plan for: everyday stuff
You probably won’t be in your dorm room studying every night of the week, so include money for entertainment—whether that’s a pizza and movie with friends or concert tickets. Also add money for personal expenses, such as toothpaste, laundry, etc.
Plan for: big trips
If you want to take a trip over spring break, plan now. Estimate the cost for what you want to do. Divide that cost over the number of months between now and then, and start saving that amount each month for your trip.
Add up your expenses
Once you get all your expenses added up for the school year, divide it by the number of months you will be in school. That’s the amount you’ll need each month. Are you shocked at the amount?
Plan for: income
Expenses are only half of your budget; how are you going to pay those expenses?
Of course, you can list any financial aid you are receiving—start with grants and scholarships, which don’t have to be repaid. Estimate any money you may earn from a job. Have you saved for college? How much will you use for your first year? Will your parents or grandparents send you any money while you are in school? What about money you receive for graduation?
Remember: The more money you can come up with now, the less you will have to borrow and repay later!
What’s next for your budget?
A budget is a living, breathing document, subject to change. Review your budget often—but stick to it.
To successfully budget, you must track your spending. Get in the habit of writing down every time you pay for something, no matter how small.
Anne Barton is the regional director for business development for the National Student Loan Program (nslp.org).
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