Paying for college often raises various financial concerns. While the most pressing issue is usually covering tuition, there are other financial worries on your mind. One effective way to alleviate these anxieties is by creating a detailed college budget.
Your budget should encompass everything from major expenses like tuition to everyday costs. Everyone's financial situation is unique, and several aspects of your budget may cause stress. However, there are several strategies you can implement to help minimize the strain that managing your college finances can impose.
Determine the 'Needs' and 'Wants' of Your Budget
When creating a budget, understanding the distinction between ‘needs’ and ‘wants’ is crucial. Your needs are essential expenses necessary for your survival, while your 'wants' refer to desirable items that, though enjoyable, are not essential.
Here are common ‘needs’ which may factor into your budget:
- Tuition
- Housing
- Books and supplies
- Fixed expenses, such as internet, cell phone service, and debt payments
- Food
- Toiletries
- Cleaning supplies
- Medical insurance, medications, or medical devices
Here are common ‘wants’ you may have to include:
- Membership dues for Greek life, sports, or campus activities
- Entertainment expenses
- Shopping
- Delivery services for food or groceries
By clearly defining these categories, you can develop a balanced budget that meets your essential needs while still allowing for personal enjoyment. The examples provided are just a starting point; you may have additional expenses to consider, such as existing bills like credit card payments or private student loans that you chose to pay while in school. If you own a car, you’ll also need to factor in common costs such as gas, insurance, and parking.
Having a car can be a unique situation—some individuals may require one for commuting to college or work, while others might find that living on campus eliminates the need for a vehicle, thus saving on related expenses.
Remember, budgeting is a highly personal process and should be approached as such.
The Fine Line Between Needs and Wants: Understanding Splurges
Wants can be deceptive, often emerging from genuine needs. When you need something but begin exploring options that seem more like indulgences, your need can easily transform into a want. For instance, if you’ve lived in Florida your entire life and only own a fleece jacket, moving to Chicago for college means you'll need a winter coat. You might find a stylish winter coat at a department store for $65, but then you spot a designer coat priced at $500. While it’s true that your clothing reflects your identity, it isn't essential to splurge on an expensive coat when a more affordable alternative exists. Your primary need is a coat, and it’s crucial to avoid overspending on items that exceed your budget.
Another common scenario where needs morph into wants is food-related splurging. You may have purchased a meal plan but find the thought of another day of chicken tenders unbearable. One day, you spend about $20 to grab takeout from a local restaurant. The following day, feeling too lazy to walk to the cafeteria, you opt for takeout again this time spending $25. This pattern may repeat multiple times over the course of a week, leading to a surprising total of over $200 spent on food, not accounting for the cost of the meal plan you didn’t utilize.
Even with something as simple as hand soap, prices can vary widely—from 99 cents to over $100. It’s vital to be mindful of your spending to avoid unnecessary and habitual splurges. The key takeaways are clear: affordable options for nearly every product are available, and even small, frequent expenses can accumulate significantly over a period.
Dealing with Budget Needs
Sometimes the needs in your budget are fixed numbers. However, you may find yourself in a situation where you want to improve your financial stability. There are several options to consider when reviewing the needs in your budget, and you might even discover ways to reduce some of your expenses. While this will require some effort, the potential rewards can be significant.
Are you aware of the power of asking questions? Matt Schulz, author of Ask Questions, Save Money, Make More: How to Take Control of Your Financial Life, offers valuable tips and scripts that can help you save money.
Here are a few strategies for asking questions to refine your college budget. You can apply the principle of asking the right questions to the right people to explore ways to make your life more affordable. While it's not always appropriate to negotiate everything, you might be surprised by how many requests are considered standard practice.
Paying Your College Bill
As you create your budget after receiving your financial aid award letter, it's important to consider your school’s financial aid offerings for the year alongside the total cost of attendance. The remaining balance can seem daunting, but there are steps you can take to explore opportunities for additional financial aid or tuition reduction.
One option is to appeal or negotiate your financial aid. Appeals are justified when the information you provided on your Free Application for Federal Student Aid (FAFSA®) no longer accurately reflects your family's financial situation. For instance, if your father lost his job recently and you submitted your FAFSA using data from two years ago, this could warrant a review. Check your college’s website for specific guidelines on submitting a financial aid appeal.
If you do not qualify for an appeal, consider scheduling a meeting to discuss your financial aid package with your school's financial aid office. Before your meeting, do some research on the scholarships and grants available at your institution. Identify those you are eligible for and make a note of any that were not included in your initial financial aid offer. During your discussion, ask your financial aid advisor if there are any remaining funds that could be added to your package.
While negotiating your financial aid may not guarantee additional assistance or a reduction in tuition, it is unlikely to adversely affect your existing offer. Remember, the final decision rests with your school, so it’s crucial to approach the conversation with preparation and clarity.
Housing
If you plan to live on-campus, look at all the options available as some college may have economy options to help reduce the housing costs. If you are not assigned an economy option, discuss the situation with your school. While they may not be able to move you, they may have flexibility with reducing the rate to match the lower rate if you requested the most affordable housing option. Keep in mind that dorm rooms often cover the costs of utilities and internet, which can help reduce your monthly budget.
If you plan to live off-campus, it’s best to try to find an option with roommates. Roommates can help drive down the cost of rent and utilities. When you look for a rental, look at options within a set budget. If you do find a unit that is a bit out of your price range, it may be worth it to ask if the rent can be reduced. Having your monthly rent reduced by $50 will save you and your roommates $600 a year. However, not all landlords will entertain reducing their rent. If you're working with a real estate agent to find a rental, they might already know how flexible the landlord is on pricing. This could help you negotiate a better deal.
Monthly Bills
Many consumers are often unaware of which bills can be negotiated and which are fixed. If your city or town has a set rate for water usage, reducing that cost may not be possible. However, there are other monthly bills that you can negotiate. In many instances, it might not be clear when you could request a lower rate, so it's worthwhile to take some time to explore your options.
As a college student, it's worthwhile to reach out to your utility, internet, or cell phone providers to inquire about potential student discounts. Even if they don’t have a specific student rate, don’t hesitate to ask about any adjustments you can make to your account to lower your monthly expenses. Additionally, consider bundling services, like your cell phone and internet plans, to further reduce costs. If you opt for bundling, be sure to review the terms of any existing contracts with your providers before making any commitments; you want to avoid early cancellation fees or other penalties. Schulz also advises that when you receive a discount offer, ask how long it will be valid and request it in writing.
Take the Time to Budget
Life as a college student—whether you’re about to start or already enrolled—can be incredibly hectic. You may find yourself balancing various responsibilities, but taking the time to establish a budget can help you avoid financial pitfalls and even save you money. A well-thought-out budget allows you to pinpoint areas where you can shop around or negotiate for more affordable options. Budgeting is likely to be a part of your adult life, yet many people only begin this practice when they encounter financial difficulties. By cultivating the habit now, you can lay the foundation for a financially stable future.