College Students Should Budget, Too
College students aren’t known for having a lot of money on hand, but that’s precisely why it’s even more important that they budget their finances.
“Goals provide direction,” said Cindy Clampet, Oklahoma State University Extension assistant state specialist, family resource management. “Deciding what’s most important helps people use their money and resources to the best advantage in school, as well as providing a strong start after graduation.”
Classic examples of college goals include paying for enrollment costs, saving for a car or simply planning for a trip home between semesters. Long-term or short, those targets require plans to balance against daily expenses.
The first step is to look closely at income and expenses as well as credit use and any reserve accounts where funds are set aside for quarterly, semiannual and annual expenses such as insurance.
“To get a good idea of your financial picture, it’s important to figure out how much money is available and where funds are being spent,” Clampet said.
Write down all sources of income and all expenses, consider the plan’s feasibility, then finalize it and put it into action.
“Be prepared to make adjustments as you go along,” Clampet said. “This may take some time and require changes in some of your financial habits. Just keep your goals in mind for motivation and encouragement.”
One unique consideration for college students may be the order in which they spend financial aid.
Students should spend “free money” such as grants and scholarships first before using funds earned or saved through jobs or the federal work study program. Finally, they should use money gained through loans.
“Spending school funds in this order will keep the amount you borrowed as low as possible, which in turn should allow you to pay off the debt faster,” Clampet said.
For more information about money management, contact the nearest county Extension office and visit www.fcs.okstate.edu online.
OSU Extension fact sheets are available as well: The Financial Puzzle: Goals, Choices and Plans and The Financial Puzzle: Putting the Pieces Together.