An effective checklist to help college students develop a budget includes long- and short-term targets over the time they expect to be in school. It helps prevent excessive debt and gets them started on a firm financial foundation. For many students, college is the first experience with managing money and planning a budget. It’s important for the learner to take ownership of the process and prepare for the future.
How much money do I need? The first step toward creating an effective budget is figuring out how much money you need for the time you’re going to be in school. Several online tools are available to help you arrive at a fairly accurate estimate. Be sure you’re using an updated one with current information from the last school year, and be sure it includes room and board, books, and other fees. The most accurate figure is one you get directly from the business office at the school you want to attend. Plug all of this information into a spreadsheet to keep yourself organized.
How much financial aid do I have coming in? Once you know how much your education will cost, you’ll want to consider how much of that is covered by financial aid through loans, grants, scholarships, or family contributions. You want to think through:
Whether any of your financial aid is restricted. That means it can only be applied to tuition or for some other specific category of expenses.
Whether your parents or other family members have any funds saved up for your college expenses. Can they pay anything toward the costs upfront or over time?
When you will actually receive the funds from each type of financial aid. For example, if you have a scholarship for $5,000 per year, do you receive the full amount at the beginning of each academic year? Or do you get $2,500 a semester?
What is the balance you need when you subtract your available resources from the expected cost of attendance? This is the amount you’ll need to come up with through working, saving, etc.
Set a timeline. Create a timeline for the period you’ll be in school and mark when you’ll be spending what. Include the due dates for tuition payments, financial aid deadlines, and other relevant information. If you’re enrolling in a traditional four-year college degree program, break it down into semesters. Be sure to take into account:
- Periods of time when you won’t be able to work or work as much because of internships or heavier-than-normal workloads.
- Travel abroad or do other specialized studies that you want to do.
Where you plan to live and the associated expenses. For example, will you stay in the dorms or get an apartment off-campus?
Follow the budget. Stick to your plan as closely as possible, realizing that some flexibility must exist. Unexpected expenses, as well as unexpected savings, will happen.
Taking the time to create your budget on the front end is a wise first step toward your life after graduation. Having a plan makes it less likely that you’ll borrow too much money and leave school with a debt load that limits your career and life choices.