Creating Your College Budget

Budgeting can be new territory for students. Managing money will be one of the biggest new responsibilities for most students. Many students have not had any guidance or education about managing their money. Most people end up learning the hard way and costing themselves a bundle in the process. It is up to you to educate yourself about budgeting and other money matters.
You may be surprised to find out that many college students do not even know what the word budget means. If you think about it, they have, for the most part, never had to worry about budgeting any kind of money because they have always lived at home. At worst, they might need to figure out how to make their gas money last another week.
Adults know how hard it can be to stick to a budget and you should realize that your son or daughter in college will struggle with this as well. It helps to remember that this may be the first time in their lives that they have to discipline themselves, something some adults struggle with.
When preparing your child for college, simply explain what budgeting is in terms that they can understand. Give them an example using a monthly income and a list of bills. Figure out together how much is needed for gas, food, electricity, phone and school. Whatever is left over needs to be divided into savings, emergency money, and fun money. It helps to figure out the monthly budget and then divide the total amount of accessible money into a weekly allowance for yourself. It may help if you open more than one account to keep money separated. A simple way to explain budgeting is to say that it is a plan that lists all of your money coming in and money going out.
Create a template spreadsheet that your child can use to track unexpected expenses month to month. They should note any extra expenses that pop up during each month. Things like oil changes, auto repairs, medical expenses, buying clothes and other unexpected expenses can be planned for to a degree. Keeping track monthly will help them look back and determine if their emergency funds are enough.
Keeping up with the budget will be challenging and you should not expect them to be really consistent. Expect setbacks and be supportive of the efforts that are made. Offer remedies for mistakes, such as taking out cash on payday instead of using a debit card or checks is a very effective way to stick to a budget. When the money is gone, you know that you are not allowed any more. Encourage your child to leave their debit card at home so that they are not tempted to spend any money from their bill or emergency funds. If there really is not enough money to get them through, then you may consider student loans to bridge the gap.

About the Author: Evelyn Saunders, a retired teacher, is the editor for student-loans.net, a provider of student loans and information on how to get private student loans as well as consolidation. For more information, please visit http://www.student-loans.net.

How to Manage Bills in College

Students generally find it very challenging when learning to pay their own bills. It is just new territory and setting limits on yourself is not always the easiest thing to do. Until college, your parents probably took care of all of the financial responsibilities of the family. Learning to teach yourself how to budget and make responsible on-time payments is easier said than done.

College is about more than getting your degree. It is literally about learning to live a responsible adult life. Getting your degree is only the first step in setting yourself up for a financially secure future. Paying your bills on-time may sound like a small part of college, but really it can have a long-lasting affect on your life.

Many students blow off a bill to take a weekend trip with their friends, go shopping, or in some cases, buy groceries! The truth is, many people only become educated about the ramifications of missing payments by actually missing them. This can take a very long time to recover from and it really is not worth learning the lesson the hard way.

Unfortunately, many people are under the false impression that a penalty fee is the only repercussion to paying a bill late. This may even seem true for a little while, until it is too late. You go to buy that first car or home and you simply get denied. This is because utility bills, rent, credit card bills and student loan payments all flag your credit when you miss a payment. After a couple of flags, you suddenly are labeled as a person who overextends themselves financially and then does not manage their time or money well. Once you are seen this way, it can take years of on-time payments to prove otherwise.

Even one late payment can blemish your record. This means that if you do qualify to buy that house or car, you will end up paying a lot more than your peers. This is because banks and loan institutions will require a lot more money down to cover the loan. They will also charge you a much higher interest rate than people that pay their debts on-time. Many mortgage companies require that all bills be paid on-time for at least one solid year before they will approve a loan at any interest rate.

The bottom line is that you really have to take every single bill seriously. Keep your credit as clean as possible so that you can eventually qualify to buy a house or car at low enough rates to afford it. Make sacrifices to pay your bills on-time. Have your paychecks direct deposited if possible and have your bills automatically withdrawn the day after your paycheck clears. Open a second bank account that is specifically for money other than your bill money so that you do not accidentally dip into your bill funds before you get the chance to pay them. Take every precaution necessary to keep your credit card payments, student loans, and utility bills paid in full and on-time.