For most students, college is the first time that they have been away from home for any length of time. It may also be the first time that they have managed their own budgets. If you find yourself in this position, knowing how to handle money and how to make it last may be a foreign concept. There are several practical steps that you can take to survive college without running out of money.
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Work Out Your Available Funds
Before you can set up a budget or spending plan, you need to know what you have to work with. You may have incoming funds from many sources such as college savings plans, loans and grants, scholarships, part time jobs and parents.
Write down how much income you expect to have during each term and, most importantly, the timing of it. This allows you to plan your spending more effectively. If you have funds that are not yet certain, like an award you have not yet been granted, leave those funds out of your budget so that you don't spend based on money that might never materialize.
Plan Out Your Spending
Most of your college spending will be known upfront. You know how much you have to spend on tuition, books, room and board, and other school costs. Expenses such as groceries or utilities are not as certain and you will have to estimate what you will need to spend.
If you buy your own groceries and make your own meals, plan on spending at least $50 a week on the basics like personal grooming and cleaning supplies. Be sure to budget for extras such as outings with friends. If you set your budget up to be too restrictive, you are more likely to end up blowing the budget completely. Try to be realistic with your projections.
Set Aside Emergency Funds
Nothing ever goes exactly as planned, especially when it comes to finances. Keep at least a few hundred dollars in a savings account in case you have an unexpected expense. Your car could break down or you may need to buy a textbook you weren't aware of at the last minute. Keep a cushion for these types of events and you won't find yourself out of money part way through the term.
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Track All of Your Spending
Budgeting is only half the battle, but it is useless unless you keep track of what you spend and compare against what you thought you were going to spend. There are several ways to do this, from simply writing it down in a notebook, to setting up a computerized spreadsheet, to buying a program like Quicken.
The benefit of using such a program is that you can enter your budget and automatically download your bank transactions. The program will also warn you if you are close to overspending in any category.
Pay Attention to Your Credit Card
Many people obtain their first credit card in college. Credit card companies are often generous with the credit they give students so that they are a customer for life. Credit cards can be a useful way to build your credit score, which will be important when you begin working and buy a house or car.
Credit cards can also ruin your credit score for several years if you do not handle them responsibly. Keep your credit limit low and do not allow the company to raise it. Pay your balance every month on time. If you must carry a balance, pay at least the minimum required every month and keep your balance less than 30% of your limit.
The Bottom Line
Responsibly managing limited funds in college can be the difference between having a fun and comfortable term, and eating ramen noodles three times a day for a month. It also teaches you the financial management skills you will need after college. (For additional reading, check out Stop Procrastinating! Enroll In A College Savings Plan.)