Tuesday, January 31, 2023

How To Budget While In College

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How To Shop Ethically While On A College Budget

How to Budget While in College

Nowadays, Millenials and Gen Z more than ever are looking to shop ethically. Finding brands and companies to shop from at a reasonable price for college students while also being an ethical business can be difficult to do. Oftentimes, we either find an ethical brand or an inexpensive brand, but finding both qualities in one brand is not always an easy task. Knowing the key ways to shop ethically while on a college budget is a great way to start doing better for the world we live in while in college.

What Is A Budget

A budget is a financial plan used to predict and allocate money earned and spent each month. It can represent both goals, and limitations, depending on a persons financial needs. Using a budget can help students visualize and understand exactly how much money they will have every month from all sources, as well as what expenses they need to prepare for.

While a basic budget may represent where money goes, budgeting can also help students set financial goals, or attempt to control spending, in order to make the most of financial aid, or even start paying off student loans early.

What If Your Budget Doesnt Work

Your budget may be unbalanced by a small amount that you can correct by reducing spending, or it may have a serious imbalance. If your best efforts fail to cut your expenditures to match your income, you may have a more serious problem, unless you plan in advance to manage this with student loans or other funds. First, think about how this situation occurred. When you decided to go to college, how did you plan to finance it? Were you off in your calculations of what it would cost, or did you just hope for the best? Are you still committed to finding a way to continue in college?

If you are motivated to reach your college goal, good! Now look closely at your budget to determine whats needed. If you cant solve the budget shortfall by cutting back on optional expenses, then you need more dramatic changes. Are you paying a high rent because your apartment is spacious or near campus? Can you move a little farther away and get by temporarily in a smaller place, if the difference in rent makes a big difference in your overall finances? If youre spending a lot on your car, can you sell it and get by with public transportation for a year or two? Play with the numbers for such items in your budget and see how you can cut expenses to stay in college without getting deeply in debt.

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Budgeting For College Students: Where To Start

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A college budget that accounts for textbooks, housing and other expenses can cut stress and overspending. It can also shape healthy financial habits for the future. Start here.

Get Your Education Discount On Computer Hardware And Software

Learn how to manage and save money while in college! Even ...

Another big expense for college is technology. Many students want to get a new laptop, and with that comes all the trimming of software. Plus, some classes require their own specific software that you need to install.

If you’re getting any type of new computer or software, make sure you buy it through the education store and get your education discount. Most companies offer significant discounts to students – from Apple and Microsoft, to Adobe and more. No matter what technology you need, you can probably find a big discount by purchasing their education edition.

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Double Or Triple Your Credit Card Payments

If you’ve run up credit card debt, one of the smartest money-saving moves you can make is paying that high-interest debt off, said Perez. She suggested including double or even triple payments in your budget. It might be tough, but you’ll thank yourself later. “You’re already with student loan debt don’t compound the issue with credit card debt,” said Perez.

How Much Might You Be Able To Pay

Its true that your income might change between now and when your kid goes off to college. But its still worth spending time estimating how much you think you might be able to contribute.

Using the budget you have now, think about how much you can set aside for college savings. If you have a surplus in your budget thats not being allocated, then thats an easy place to start. If you dont have leftovers, then think about where college falls in your list of priorities and use that as a framework to help you adjust your budget so that you can make space for college savings.

If you expect your income or goals to change, use that to help you project what your savings might look like later down the road.

If you dont have a budget, use the How to Make a Budget guide to create one. Be sure to make room for college savings if it falls on your list of priorities.

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How Will Creating A Budget Help

Budgeting will help you:

  • Identify financial goals | Whether youre saving for a down payment on a car or a house or buying college textbooks, budgeting during college will help you see your daily purchases in the context of reaching your financial goals.
  • Achieve academic and financial goals | If you value the advice of a school counselor, why not recognize the importance of a budget? With a budget, youll stay on track to meet your financial goalswhether they entail saving money or avoiding debt.
  • Plan, save, and control expenses | Do you find yourself daydreaming about your next vacation? By tracking and analyzing your monthly expenses, youll be able to identify unnecessary costs, find ways to lower expenses, and get a clearer picture of how much you can save every month.
  • Avoid debt and improve credit | Are your morning coffee and snack purchases getting out of hand? Maintaining a budget and monitoring your growing credit card bill could help you cut down on those habits and stay financially healthy.

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Budgeting Tips for Students – College Conversations

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Calculate Your College Expenses

When searching for the cost of a school, you might notice a cost of attendance that is larger than the tuition figure. This is the schools estimated additional costs that will go into your education spending.

It is important to calculate the total costs that will go into attendance and understand the financial gap between how youre paying for college and how much college costs.

Tips For Saving In College

It is never too early to start saving. Here are some tips to help you develop savvy saving habits today:

Although textbook prices have risen dramatically over the past few years, the amount of money college students actually spend on these materials has decreased by 41% since 2008, according to Inside Higher Ed. You can save money on textbooks by buying them from other students and using websites like Chegg, AbeBooks, and BookFinder.

Debt.org reports that the cost of a college meal plan has almost doubled since 2010, with current students paying about $4,500 over eight months. By buying your own groceries, you can cut food costs and improve your diet by cooking healthy meals.

College allows you to meet diverse people and form long-lasting relationships. On top of these social benefits, you can save money on dormitory and off-campus accomodations by living communally with friends. Sharing an apartment with other people also lets you pool resources like transportation and groceries.

Thrift stores provide a way to purchase clothing, furniture, and small appliances affordably, while also promoting sustainable living by eschewing fast fashion. Additionally, many thrift stores including Goodwill offer student discounts to help you save even more money.

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Use Your Student Id Or Student Email

Your student ID can get you some valuable student discounts on more than just movie tickets. For instance, with a valid student email address, you can sign up for Prime Student on Amazon and receive free shipping on millions of eligible items, exclusive college deals and promotions.

Other great deals can be found on everything from computer software and FedEx shipping to newspapers, food, clothing and much more, according to Sherin. The bottom line is you should always ask if a student discount is available, Sherin said.

Do You Even Need To Budget

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Lets put something straight here. If you look at my other Ultimate Guide-style posts the one on how to build a personal website, for example youll notice that this one, though lengthy, is still decidedly shorter. Why?

Well, to be honest, I dont really want you to have to put a whole ton of thought into budgeting. It should be simple and, after some initial setup, it should become little more than a background process in your head. It shouldnt be an item of too much concern once youve structure everything correctly and fixed your spending habits.

Think of your minds ideal picture of budgeting. What comes up? Do you think of the financially savvy member of the household sitting at the table every month, writing down spending caps in all the familys different expense categories and minutely balancing available funds?

This, my friend, is called micromanaging. Its something you probably dont want to be doing with your time. And, incidentally, its something the best budgeters actually dont do.

Heres an excerpt from Jeff Yeagers book The Cheapskate Next Door:

Contrary to what non-cheapskates seem to think, only about 10% of the cheapskates polled said that they have a formal, written household budget. For most of us, a budget seems too much like a diet: a plan thats always looming over you, bring you down, when what you really need is a lasting lifestyle change that makes the desired behavior effortless.

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Cut Cable And Watch Online

It doesn’t make sense to have cable TV anymore. There are so many great options online, some of which aren’t even available on cable TV. And cable TV is expensive! Even basic plans can cost around $60 per month, which is a lot of money in college.

A better alternative is to cut cable and still watch your favorite shows – online!

There are so many options these days to watch TV online, including . Plus, there are some “illicit” ways to get new movies and more right in your dorm room. But even being legal, apps like Hulu or Hulu Live TV can really be game changing for cost and what you want to watch.

The bottom line is, stop paying for cable TV.

Take Classes At A Community College

Whether you’re supplementing your four-year university education — and possibly shaving some time off your college career by graduating earlier than scheduled — or attending a local college as a substitute for a four-year university, you can save a substantial amount of money by taking courses at a community college.

“Oftentimes, universities and colleges have agreements with other local community colleges to have classes that can transfer between each other,” Sherin said. “If it makes sense for your schedule and your wallet, see what’s available at the other school.”

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Sign Them Up For A Personal Finance Class

Does the college offer a personal finance course? What about the local community? Understanding the basics of finance such as interest rates on loans and whats a reasonable amount of debt will go a long way toward learning how to budget in college, as well as helping your child function as an adult. Prepare your child now for money independence later, and everyone wins.

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Take Care With Student Loans

How To Save Money In College | Budgeting Tips

How much money do you really need to borrow? Consider all the ways that you can lower your education costs. If you’re enrolled or considering private school, you may be paying for the prestige don’t count on the name on your diploma giving you a pay bump when you start your career. You might want to opt instead for a school that offers you a scholarship, or a lower-priced or state school.

Remember that you will have to pay back every penny you borrow plus interest. Not only that, but interest capitalization increases the amount you owe. Furthermore, you can’t get out of student loans easily, and they will not be automatically forgiven or discharged, in a bankruptcy . This is debt that will follow you around, so borrow carefully.

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Automate Most Of The Process

With the pipeline model now firmly planted in your prefrontal cortex, youre no longer unsure of what to do when you get paid each month. Theres now a clear picture of how that money should flow and where it should be allocated first.

Now, lets take it a bit further. Lets build a system that takes care of as much financial heavy lifting each month as it can, so were free to focus our attention on the things that matter like Smash Bros.

The way Ive done this is by setting up automatic payments on almost all of my monthly fixed expenses. Ive got auto-pay enabled for:

  • Rent
  • Cell phone
  • All subscriptions hosting, Spotify, etc

In addition to my fixed expenses, I also automate my investments. Each month, Ive been auto-investing $500 into my Vanguard mutual fund. Just this morning, based on my goals, expenses, and current income, I actually increased that auto-investment to $1000/month and itll need to increase further if Im going to stick with my goal!

When I can, I route the expense transactions through my credit card so I can rack up cash bonuses. Ooh, that reminds me I wanted to do an aside about credit cards.

Become A Resident Advisor

If you’re an upperclassman, consider becoming a resident adviser. An RA provides peer-to-peer advice for fellow, younger or newer students in dorms and residence halls. As an RA, you’ll help build a sense of community, answer students’ questions and more. Being an RA can pay off in a lot of ways: It looks good on your resume, it gives you real-world managing experience, and many universities compensate you with free room and board or other perks.

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Taylor Bell contributed to the reporting for this article.

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Stop Comparing Yourself To Other People

Each of us comes from a different background, and each has different priorities and financial needs. You are unique. So, don’t try to compare yourself to anyone else. Honestly, would it help to know you are richer or poorer than another student? Or that you spend more or less? No. That wouldn’t change your budget and your ability to spend. So, stay focused on you.

With all of these tips in mind, I sat down to put my money where my mouth is or at least figure out where my money is going. I was finally brave enough to open the Bank of America app, get my information and use a free budget worksheet from NerdWallet to figure out what my current budget is. I separated my expenses into necessary and discretionary, as suggested, and found that I spend around $1,350 per month on necessities and over $500 per month on discretionary items on average with a monthly income of around $2,000.

Some good news: I currently save an average of $266 more per month than I spend. Whoo hoo!

NerdWallet also let me compare how my current spending matches up with the 50/30/20 rule, which is the basic premise that you should be able to divide up your income into 50% on needs, 30% on wants, and 20% on savings. And, by that rule, I should actually be saving more like $415 per month.

Clearly I have some work to do!

Next step: Start cutting back on discretionary expenses and see what happens to my bank account. Wish me luck! It’s time to get creative.

We’re in this together!

Use Free Transportation If Possible

How to Save on Student Loans While Still in College ...

If you need to get around, use free transportation if possible. Many college campuses have free buses and shuttles that help students get around campus and even to nearby apartments.

Some apartment complexes even have shuttles for students to get to campus.

Depending on your school, see if you can leverage free transportation to get around.

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Watch Your Student Loan Borrowing

If you do have to take out student loans, you need to be very mindful of how much you borrow. If you borrow too much in student loans, you’re going to struggle financially for your entire life.

When thinking about student loans, you need to consider the ROI of your college education. A good rule of thumb is never borrow more than you expect to earn in your first year after graduation. This will help keep your student loan debt manageable so you can afford it after college.

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