Developing A College Budget

Thousands of young men and women across Kentucky are
getting ready to go off to college for the first time. And there’s more to think
about than freshman seminars and tailgating.

Tougher challenges loom, such as how to make it to
the end of the month on that never-enough allowance from home.

So it would make good sense over the next month or
so for parents and students to develop a budget together to estimate how much
money will be needed for everything from school supplies to transportation.

The emancipation of going off to college can be exhilarating,
and sometimes students don’t know what they’re getting into, say student advisors
across the Commonwealth. This is especially true for high school graduates entering
college.

Budget basics

To simplify the budgeting process, break down
expenses into categories, such as books, supplies, lab fees, meals, transportation,
clothing, toiletries, and entertainment.

Make certain to include both fixed expenses, such
as rent if living off-campus, and variable expenses, such as insurance and auto
repair. Then, estimate how much money will be needed to cover each category.

Be ready to expand and change after the first few
months. And it’s a good idea to budget only 90 percent of your funds-keep a
buffer of 10 percent, as a security blanket.

Cutting costs

You’ll also need to learn the difference between
needs, wants, and wishes. A textbook, for example, is a need; a new textbook
may be a want; and a new textbook with a dictionary may be a wish.

What if you find that you simply can’t make ends
meet? You’ll have to either increase your income or decrease expenses.

You might try to find a part-time job. Another option
is to start your own business, perhaps doing research for another student, running
a wake-up call service, or housesitting off-campus.

You may still need to trim expenses. Although you
think you are living on a bare-bones budget, you will be surprised at how much
you can cut back. Often, your college ID can be used for discounts on food,
entertainment, haircuts, and school supplies.

Shop for food and toiletries wisely, taking advantage
of sales and coupons.

Keep a jar of peanut butter, a box of crackers, and
Ramen noodles or macaroni and cheese handy for snacks, rather than ordering
a pizza.

Cash lines

You should set up a checking account at a bank
near the college, taking into consideration such convenience factors as hours
of operation and automated teller machines. Some financial institutions even
offer no-fee checking to students.

To get a credit card, apply at the bank where you’ve
established your checking account. Go for one with no annual fee, and resolve
to pay off the balance in full each month so you don’t have to pay interest.

If you run up a balance of $1,500 on a credit card
that imposes an interest rate of 19.8 percent and you make only the minimum
payment each month, making no new charges, it will take you 15 years to pay
off the $1,500 and you will have paid $3,287 in interest.

So, tell yourself: "This is simply a way to
access a loan; it is not free money."

College Money Saving Tips

If you are college-bound and on a tight budget
or are simply trying to keep a few bucks in your pocket, consider these tips:

• Leave your car at home, if possible.
• Use coupons, and shop at discount or dollar stores.
• Know where the bargains are-read the campus or local newspaper and ask other
  students.
• For entertainment, find out what the college offers for free or for only
  a small amount, such as movies, plays, and concerts.
• Shop around for the telephone company offering the best long-distance rates,
  and make calls to home at nonpeak hours to save more. Or write home for just
  the cost of a stamp.
• Cut down on eating out, or look for coupons to lessen the cost.