It’s back to school season and an important thing to talk about is your college budget. Whether you’re living at the dorms for your freshman year or renting an apartment, having a budget and sticking with it will shape healthy financial habits for the future. Creating a college budget will not only help you in the future by building healthy financial habits, but it will also cut stress and overspending.
Define Ground Rules
Before you build a college budget, you need to go over some important details with people who will be involved in financing your education. Discussing the situation together will ensure everyone is on the same page. Some important ground rules to go over are:
- FAFSA and taxes
You should determine whose information is required to fill out the Free Application for Federal Student Aid or FAFSA, and who can claim tax credits and deductions. This will play a huge role in your tax return when the time comes and if you can receive any federal aid or grants.
- Who is paying for college and how?
You might already know this, but just to solidify the answer, it’s good to have a conversation before the start of each school year to decide whether your family will pay for costs out of pocket or if you’ll need to get a job, rely on financial aid, or combine the two options.
- What expenses to expect
In addition to tuition, there are other expenses for college costs like transportation, school supplies, and more. Make a list of likely expenses and estimate the cost to get a more accurate understanding of your budget.
- Credit cards and bank accounts
If you’re opening a credit card or a bank account for college funds, you’ll want to define ground rules with yourself or the cosigner to your card. If the credit card is only for emergencies, define what constitutes an emergency.
The next step in budgeting is to anticipate your expenses. You’ll need to try to account for all areas of spending before creating your budget. Some common college-related expenses you should be wary of are:
- Textbooks and school supplies
Course materials can eat up a large portion of your budget. On top of textbooks, you’ll need to also plan for purchases like notebooks, a laptop, a backpack, and more. There are also plenty of ways to reduce spending on textbooks, like using the college library.
- Room and Board
When it comes to food and living arrangements, keep your options open. Compare the cost of living on campus and getting a meal plan versus renting an apartment. If you’ll be renting an apartment, consider the number of roommates and the cost of the apartment and the proximity to campus.
Most colleges provide a bus pass, but if you’re bringing your car, be sure to factor in gas, maintenance, and insurance.
Budget for seasonal clothing and job-fair/interview outfits.
All work and no fun makes Jack a dull boy! Factor in a budget for fun stuff like travel and social activities!
Track Your Spending
Now that you’ve determined your college budget, it’s time to track your spending to see if you actually meet it. Tracking your budget has gotten a lot easier than the old spreadsheet days. There are multiple apps you can use, depending on personal preference, that link to your bank account and track your transactions. However, you need to be sure these apps are safe and are password encrypted to ensure your information is safe.
After you’ve managed to stay on top of your college budget as a student, you’re in good shape. Continue with your financially healthy habits with life after graduation. You’ll be able to build financial goals like saving for a trip or an emergency fund and, if you have student loans, you’ll need to pay them off too.
RMLEFCU offers financial planning and advice with every membership. Call or contact us today at (303) 458-6660 or click this link to speak to our financial planner.