The key to affording a college education is to begin planning early through an expense budget. One of your first financial planning strategies is to determine the cost of obtaining a post-secondary education.
Make a list of all college expenses
Here is a basic sample of expenses for an academic year. Adjust these amounts as needed:
Expense Amount Type Tuition $4,000 Fixed Books and supplies $1,000 Variable Rent (off campus, inclusive) $4,000 Fixed Transportation $800 Variable Cable (television) $500 Variable Internet $400 Variable Cellphone $500 Variable Food and household supplies $1,500 Variable Laundry (laundromat) $200 Variable Pocket money (entertainment, etc.) $700 Variable Total $12,600
Consider cutting back on our removing items that are not necessary, but be realistic. For example, dropping cable TV for Netflix is a simple change, but eliminating your entertainment budget entirely is not realistic.
Your budget may differ slightly depending on your expenses e.g. you may have a car, and therefore need to pay for gas and insurance rather than public transportation costs.
Be sure to label your expenses as fixed or variable. A fixed expense is an expense that will not change monthly (ie. rent, car payments). A variable expense may differ monthly (ie. food, entertainment, clothing).
Determine your income
Figure out how much money you’ll have every month. This includes student loans, savings, job income, allowance, family assistance and so on.
Compare your income and your expenses
Compare your income and your expenses. If you have less income than you spend, cut back on variable expenses.
Don’t forget savings
Set a goal to put aside a certain percentage of your paycheck towards savings. Start off at 1%, and see if you can increase that goal every six months. Savings are important, especially to take care of large, unseen expenses (e.g. emergency car repairs, illness, sudden job loss).
Review, review, review
Constantly check your budget to make sure you’re on track, and make adjustments as needed. Consider using a free budget tool like Mint.com to help you stay on track.