Planning for College — Preparing for Expenses

Many students that enter college for the first time are often surprised at how fast their money seems to disappear. They soon realize how much they depended on their mom or dad to cover food, housing, and even entertainment expenses. We've provided some key suggestions below that might help you prepare for some of the expenses that come along with college life.

Begin With A Budget
Everything in a budget is either income or an expense. Any money you receive is income and any money you spend is an expense. If you currently know what your expenses are, you've got a head start. If you don't know, you will need to find out. Look at your bank and/or credit card statements from the last year and generally classify them into various categories. Learn how much you've been spending on food, fuel, entertainment, clothing, etc?  This will give you a general idea of what your expenses might be for this year. To access a budgeting worksheet, click here.

Housing
Deciding where to live is an important decision. You can rent an apartment, live in a residence hall, or stay with parents or relatives. Housing will probably be the largest single expense in your budget, so consider the costs carefully. Living with parents is usually the least expensive option unless you will have to commute over long distances. Moving and transportation costs should be included in your thinking as you decide where to live.

Food
After housing, the next biggest item on your budget will be food. Life as a student is not supposed to be a time of luxury. We all know that eating at home is usually cheaper than eating out. Do comparison shopping. Seemingly insignificant savings in this area can make a big difference over the course of a year. Consider improving your health and pocketbook by reducing your consumption of expensive foods. you will notice that buying excessive meats, poultry items, fish and even cold cereal can empty your pocket book rather quickly. The foods you should eat the most of are generally the cheapest. Plan meals ahead of time and buy food only for those meals. When cooking, cook enough for several meals. Having leftovers available for reheating will save time and make you less likely to rely on frozen food and junk food. If you spend a lot of time on campus, just hate to cook, or both, consider purchasing a meal ticket through your campus cafeteria. It will be more expensive than doing it yourself, but it will at least guarantee you meals.

Clothing
It's easy - but unnecessary - to spend a lot of money on clothes as a college student. When buying clothes, ask yourself, "Do I really need this or would it just be nice to have it?" If you do need it, is it the right size, fabric, and color? Will you get your money's worth out of it in long- term use? Does it need to be dry cleaned? If it needs pressing, and you don't iron, how much will laundering and ironing cost? Can you get the same thing cheaper someplace else?

Transportation
How much are your monthly car and insurance payments? How much does it cost to maintain your vehicle? It's hard to get by on a typical student budget with a $300.00/month car payment. Consider the alternatives. Do you really need a car? Can you walk or bicycle or take the bus to school and/or work? Can you carpool with someone? If you feel a car is a necessity, can you change that by living on or near campus? How about trading in your present car for something less expensive? 

Books and Supplies
Books and supplies are unavoidable expenses for most students. Check for used books before buying new ones. Sell books back at the end of the quarter. Buy cheaper notebooks and other supplies.

Health and Fitness
Hopefully your health costs will be low while you are a student. Eating a good diet and getting adequate sleep will help keep costs down. Exercise will help keep you fit not only by maintaining muscle tone, but also by relieving tension. Take a few minutes several times a day to thoroughly relax. If you feel yourself feeling overwhelmed academically or personally, make use of tutoring and counseling services that may be available through your school or community.

Entertainment
This is the easiest budget item to cut. It's easy, not because entertainment isn't necessary, but because there's so much free entertainment and so many good deals for students. Students get bargain prices on an incredible variety of campus events. Wait a few months and see the most popular movies at the dollar theaters. When choosing entertainment, remember you are investing not only your money, but also your time. Choose something worth both.

Understanding and Using Credit
Credit is relatively easy to secure nowadays. If you haven't already, you will probably soon receive an offer from a bank or department store for a credit card. Consider carefully before accepting. Basically a credit card is an unsecured loan (you don't need collateral to borrow). The card issuer assumes you will pay the loan off with future earnings, but from their perspective, preferably not all at once. Credit card companies are counting on your wants being larger than your ability to pay. You get instant (if short-lived) gratification and the issuer gets interest. In short, just use caution when in comes to your credit.

Adapted from Managing Your Money: It's Common Sense, not Magic; Student Financial Assistance Office, Arizona State University.

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