Budgeting

Are you seriously considering college, or are you now attending a college to pursue a professional career? If so, you are making a very adult transition toward your own unique future path. One of the key factors to the success of this (or any) endeavor is how you will best manage your money to meet that future. Budgeting is the discipline of acting responsibly and thinking ahead with your money. All college and would be college students should use a budget to manage their lives financially.

Start Early, In Fact, Begin Now

Though you can/should start even if you are already well into your college career, it's best to start much earlier and progress through three phases; junior/senior years of high school, freshman/sophomore years of college and junior/senior years of college.

While Still in High School

If still in high school, start earning and setting aside money for college right now. It's never to early to start learning that college costs money and that you, the student, is ultimately responsible for paying for college.

A great first exercise is to start a three-month journal of your expenditures that capture all monies spent under two headings; needs and wants. Make note of the needs you spend money on like gas verses the wants like fast food where money is spent. While it's true college life will be very different from your home life in high school, your habits will largely stay the same until you notice them and make proactive decisions to change them. After three full months, sit down and review the your expenditures for misalignment with your current priorities, then talk with others who've been there and make a best guess what your priorities in college will likely be and how your expenditures should change to meet those. If you've had the time to do this before you plan and execute your formal budget, your budgeting will be much more effective.

Now is also the time to do a lot of research on the income side of you budget. Learn about every possible grant and loan you may have available to you as well as what better paying part-time jobs you might apply for at home and in your college town. Of course, it is vital to learn about all the tuition, living and student costs for your chosen colleges to plan for your mainline college life expenditures as well. Finally, with the help of a parent or trusted adult its time to research and set up all the bank, debit card and yes, even credit card accounts you will need to go on to school. It's important to realize the debt plays an important role in financing and managing college, because much, if not most of the money being spent will be borrowed. That means the student must realize that they'll be paying all that borrowed money back and squandering money is not an option. Armed with this information you will be able to plan your upcoming life transition and make a valid budget for your college career.

Entering College

During the first two years of college use a formal budgeting process using a budgeting worksheet for money management that meets established priorities as well as accounts for actual income/financial aid and expenditures.

Since grants and loans may be awarded by school year or term, divide the total income by the number of months to arrive at a budgeted monthly income. In fact, a best practice is divide this further down into weekly chucks to gain even more control over the process. Then work out the expenditures side of the budget by accounting for all term-related costs like room/board and books, all monthly costs like rent, utilities and finally all weekly costs like food, toiletries, going out, etc. It's very important to assign actual amounts to each and do a running follow-up of at least two-time periods back to check for plan-to-actual assessment. The keys to making the best budget are the accuracy of the amounts assigned to every item in the budget and accounting for even the smallest items/expenditures. The very best budgets also set aside some money that you put into a savings account to reward yourself with something fun. If anything is too expensive to fit in your normal set aside amount, just save money for each of the specific items you want and get them. But as a young adult, you should save an amount, however small, just for the future and your responsible budget must now include monies set aside for unexpected emergencies such as car repairs. If you don't use the emergency funds, that's just more savings you have for the future.

With any budget, it is vital to set a standard day in a week, a month and in the school term to record the expenses, account for the income and 'do the math.' Take that time to look at your checkbook, bank statements, wadded up receipts in your pocket or your desk drawers, record everything on your budgeting worksheet and assess how you are doing regarding your financial priorities. Make a good habit of knowing your own habits - keeping track of where you spend money and how much is spent.

There are many other very good practices you may learn from others to make the most of money while you are in school. As a student you may get special banking services, discounts at stores, cards and vouchers that give you discounts. Use them all because they may increase the spending power of your money. Learn about these from your friends. Another tip is to live within the cash you have on hand. When you go out at night with friends, put only the amount of cash in your wallet that you can afford to spend and leave your debt and credit cards in a safe place back in the dorm (to avoid the common ATM temptation).

As a young adult with very grown up responsibilities regarding money, you are earning the right to be your own person. Live up to those new responsibilities!

Final Two College Years

While, the last two years of college are much like the first two and all the budgeting activities and advise are the same, a maturing adult should be mindful of their changing priorities and manage their savings to reflect those shifting priorities.

The very most impactful decisions a student is likely to make regarding their financial future revolve around career options they will be able to pursue after graduation. It's as important to be mindful of the future earning potential of a career path as it is to be aware of a career's fit to the student's aptitudes or desired work life. Whatever their career choice may be, the student must enable to repay their college loans and enable every other aspect of their financial footing/growth. Therefore to attain a promising financial future, earning potential after graduation should help guide student's choices while still in school, regarding majors, minors, classes and activities etc.

If the student intends to find a job after graduation, by the junior year, it is a good practice to begin setting aside a small amount for the transition from school to the world of work. A whole host of new expenses can be anticipated such as job search, rent, auto, etc. that may all begin at once. If the student plans to go on to graduate school, a research and evaluation exercise similar to the work done before college should take place about two years ahead. Graduate school incomes and expenditures are quite likely to be different then the undergrad experience has been and those specifics need to be planned for.

Planning and paying for college can be challenging, but it doesn't have to be overwhelming. The bottom line for those budgeting for college is; don't give up! Making a budget and sticking to it isn't always easy, but keep at it and you will be in control of your financial destiny both while in school and as you go through life.