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PFPlanning.com
Part 3:
Budgeting:
For College Students
Leave College Without Credit Card Debt
You're in college, so it's too early to be
thinking of having a personal financial plan. That's for after you
graduate and you're making the big bucks, right?
Unfortunately, many college graduates who believe
this start their new lives after graduation weighed down with debt that
often follows them for the rest of their lives. You don't need to be one
of them, but now is the time to make sure that you don't start down that
road.
You're on your own for the first time in your
life, and suddenly you have to juggle all of your own finances. You may
have what seems like a large amount of money from student loans,
financial aid, your hard-earned savings, and financial support from your
family.
And then there's the credit card, or cards, that
are suddenly coming your way. You buy clothes, gas, beer, pizza, concert
tickets.
You party. Before you know it, you find yourself
unable to pay your credit card bills, or you have no money left to buy
books for your classes. Or you may get along just fine for awhile, only
to have a rude awakening at some point.
Learning the Hard Way
Students figure they can spend now and make up for
it later, when they'll have a good job. See About's lessons on
Credit and Debt Management.
According to an advisor at a major university,
more students drop out of college due to credit card debt than to
academic failure. The best way to prevent this is to adopt a spending
plan early in your first semester, and stick to it.
Like anybody else, college students are usually
surprised at how much the little expenses add up to. A cup of coffee at
the local coffee shop before classes each morning can total $46 a month,
or nearly $200 a semester. Smoking is one of the most costly habits. At
$3.50 a pack, a pack-a-day habit can total well over $400 a semester. It
doesn't take much to reach thousands of dollars a semester on
incidentals.
Students who get a handle on their spending and
their available funds early can avoid the stress of being unable to pay
off their bills and having to work more and more hours during college in
order to juggle their finances.
The basics of budgeting are the same for students
as they are for anybody else: list the sources of your income, such as
savings from your summer jobs, financial support from your parents,
financial aid from the school, scholarships, and income from your job if
you have one. Then list your expenses, such as tuition, books,
groceries, gas, entertainment, etc., in as much detail as possible.
Print out the budget worksheets listed in the link box at the top right
of this page, or make your own.
If your expenses are less than your income, you're
in good shape as long as you stick to your spending plan. If your
expenses are MORE than your income, you need to find ways to cut
spending or increase your income. For tips and advice on how to do this,
see
Budgeting 101.
A college degree is no guarantee of an ability to
manage your money wisely. It takes effort and discipline, and the time
to start is now.
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