Budgeting for College Students
By Allie K. Williams
Sunday, March 4, 2018
Everyone knows that college tuition is not cheap. This concept resonates even more for those who have had to fund this experience themselves or who have not had years to save and prepare for this type of an expense.
But, if you could do something today to save $1,000 or even $4,000 on tuition costs, would you do it?
The obvious answer is yes. After all, who wouldn’t want to save money on a purchase they already have to make. Everybody wants to have extra money for fun activities while in college, but how about simply graduating with less debt?
The hard truth is that we all have debt, whether from a car, mortgage, student loans, etc. The good news, however, is that even though we all have some form of debt — those with debt from student loans can control the depth of their “money pit.”
Today, more than 70 percent of students are graduating from a four-year college or university with an average of between $25,000 and $30,000 in student loan debt. With such a high percentage of our students being weighed down with such a large financial burden, it is important that current and incoming students be more educated on the subject of finances to lessen the financial consequences that are attached to student loan debt.
The key here is to realize that when you are borrowing money to attend school, every dollar you spend is a borrowed dollar. When you budget, you get to see how you are spending those borrowed dollars, and then you can decide where spending your money is worth it to you.
Budgeting is one of the biggest choices for financial success any student can make. It is also one the hardest things for a lot of people to do.
Building a budget is not meant to be complicated, it just gives you a plan to effectively spend your money. Ask yourself, if you were to stick to a budget, how much sooner do you think you could reach your financial goals? With that in mind, budgeting becomes a lot easier when you can align your budget with your financial goals, in this case, graduating with less student loan debt.
Make sure that when you budget you are being realistic about it. Too many times people shortchange their budget and can’t seem to realize why they have no money left over at the end of the month like they thought they would have. So your first step to successful budgeting is to simply track your annual expenses for a month. By doing this, you can more accurately and realistically predict your budget.
It’s also important to keep in mind the differences between your “wants” versus your “needs.” While you may “want” Starbucks coffee in the morning, you don’t “need” that $4.50 Grande iced Carmel macchiato. Especially if that need entails borrowing the money at 6 percent and taking ten years to pay is back. Go to Starbucks five days a week before class for four years and you will have added $51.96 to your student loan payment every month for the next 10 years.
The goal here is to try and get you to understand how you are spending your money and the effect it will have on your financial life after your graduate.
An accurate monthly budget can help you reach your financial goals, whether you are trying to buy a new house, save up for a car, or trying to pay down or pay off your student loans. Try to develop a budget to accommodate weekly, monthly, quarterly, and annual expenses so you are never caught off guard with an unexpected expense and without a safety net to fund it.
When you are able to stick to a budget, you avoid overspending and by doing so can save thousands of dollars each year — so long as you are honest with yourself and with your budget.
Allie K. Williams is a former MBA student at ECU and now is a student financial support advisor in the School of Dental Medicine.