Budgeting Tips for College Fishmen - Brief Article

Career World, April, 2001 by Melissa M. Ezarik

Learn to make smart money choices now and avoid the college-cost blues.

Planning for college is about making choices, and those choices go way beyond choosing your school. Deciding how to manage your money is a choice you'll want to handle early and with care.

This is a lesson some students learn too late. Take Jen's friend Jason, who lived down the hall from her at Boston College. With a new credit card in his wallet and newfound independence, Jason charged $500 worth of pizzas during the first month of school. "He used to ask everyone in our hallway if they wanted some," Jen recalls. Now, six years later, "he's probably still paying it off!"

If Jason had thought about a budget before getting to school, he would have realized that topping off most days with a pizza was more than he could afford.

Obvious? Most people would think so. But there are lots of hidden expenses at college. Most students end up feeling overwhelmed by all the costs. Moira, a recent graduate of Southern Connecticut State University, warns, "Don't underestimate how broke you'll be."

Learn to make smart money choices. It's never too early to start estimating your college budget. Step into Budgeting 101, where class is in session.

Lesson 1: How Much Will You Have?

Creating a budget requires knowing how much money you have--your income--for the things you want or need to buy. The first step is estimating what your income will be while you're in college.

Possible sources of income are scholarships, loans, summer job savings, parents, and money from a job at school. Most of this money may be going toward tuition, fees, and room and board. These are usually paid at the beginning of each semester. When estimating income for your personal budget, focus on the money you will manage yourself during the semester.

Once you have estimated your total income, divide it by either the number of weeks or months you'll be at school. A monthly budget can help you plan for monthly bills, such as your phone bill or a birthday gift. A weekly budget may be better for keeping track of daily expenses, such as snacks and entertainment.

Recent college grads recommend getting a part-time job on or near campus for extra spending money. Keep in mind that on-campus jobs, especially the good ones, fill up fast. So apply as soon as you get to campus. Be sure that any job you take is flexible enough so you can concentrate on your classes and social life.

Lesson 2: Where Will It Go?

Once you have estimated your income, make a list of what you will spend it on--your expenses. There are two types of expenses: fixed, which come regularly and are the same amount each time (examples include Internet access and your car payment); and flexible, which may vary in frequency and amount (examples include entertainment, clothing, transportation, and long-distance phone charges).

"There are always more expenses than you plan for, and sometimes they sneak up on you," says Dr. Mallary Tytel, president and CEO of Education and Training Programs, Inc., creators of the Power of Plastic, an educational program for students on responsible credit card use.

Here are some often-forgotten expenses: haircuts, shampoo and other personal products, trips with friends, gifts for holidays and birthdays, bank fees, and extra supplies. Dr. Tytel suggests budgeting a certain amount each week for these "phantom expenses," which can quickly add up. Also, overestimate what you'll spend on entertainment.

To find the amount you can spend, take your total income and subtract your total expenses. If the expenses are higher than your total income, you'll have to make some adjustments to your flexible expenses.

Lesson 3: Starting Out on Your Own

Your college years are independent years, especially with your finances. According to one recent survey, 47 percent of high school and college students said they rarely or never discussed budgeting with their parents before they went to college.

Parents can be a big help in getting you settled financially. Ask them to help you set up a checking account at a bank near your college. Learn how to balance your checkbook monthly. If you're getting a credit card, apply early so you're familiar with the billing statements.

Once you get to school, begin recording every penny you spend, so you'll know right away if you're going over your budget. Simply being aware of where your money goes is often enough to help you want to spend less. Adjust your budget to match your income and expenses.

Lesson 4: Sticking to Your Budget

One common budget pitfall is trying to keep up with your friends. Remember that each person has a unique budget, and you may have less spending money than someone else. "It is OK not to have the latest in computer or fashion accessories," says Dr. Tytel. "Being different and independent and unique really is its own reward." So pat yourself on the back for knowing what your means are and living within them.

If you do go over your spending limit one week, try to make up for it by spending less the following week. Then you won't find yourself short on cash at semester's end.