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Back at College and Broke Already



HESC offers advice to help develop a spending plan

Highlights:


Are lattes, name-brand jeans and an interactive phone with a web plan a few of your budget priorities? Without a spending plan, you may find yourself caught short when an unexpected expense comes along.

To avoid a budgeting crisis later in the academic year, the New York State Higher Education Services Corporation (HESC) advises students to create a budget that will cover books and supplies, transportation, personal care items and other necessary expenses first.

Where does it all go?

Occasionally, despite careful planning, you may find yourself at a zero balance before the end of the week. But, if you find yourself chronically out of money at the end of each week and are calling home for additional cash, it may useful to track your spending. Small purchases can add up quickly. Here are some examples:

Take charge of your spending

The first step in budget rehab is to track your spending. Document every cup of coffee, every bottle of water, or anything you buy and its cost, for a week or two.
If you remain diligent for the tracking period, you may be surprised to see where your money went, and can identify patterns to help you re-evaluate and re-prioritize your spending to achieve your goals.

For example, if you find yourself buying bottled water every day, consider getting a reusable water bottle and bring it with you. Not only will you save money, you’ll save the environment, too by disposing less plastic.

Are the ATM and bank charges racking up? If your bank does not have an ATM on campus or nearby, consider opening an account with one that has. You’ll save money on each transaction, which could amount to a nice-chunk-of-change each week. If your bank charges a monthly fee for making purchases with a debit card, estimate your needs for the week and use cash instead of your debit card.

Use credit cards sparingly

A credit card is good to have when you have an emergency expense, but if you are using credit to purchase every-day items and carrying a balance, you may be digging a financial hole. The average graduating senior has as much as $4,100 of card debt, which may take more than ten years to repay when making minimum payments at 18.9 percent interest. That $4,100 balance may cost an extra $2,500 in interest – money that could have been spent somewhere else.

Empower yourself with a plan

After a review of your weekly or monthly expenditures, you’ll have a tool to create a sound financial plan.

Your spending plan will help you set limits and prioritize. Plus, you will determine what you really need vs. what you want. You’ll learn whether you can afford to purchase that pair of designer jeans or put off the purchase for a while.

A personal budget worksheet can help develop a spending plan; use a popular one at Mint.com or try ours to start your own budget.

Keeping it real

Develop a sensible spending plan that you can live with. Include money for entertainment so you won’t feel deprived; if you begin to feel negative about a spending plan, it won’t be successful, so keep it real.

Your new budget may take some tweaking, and it may take awhile to get used to spending according to a plan, so it’s a good idea to refer to it regularly. Before you spend impulsively, ask yourself…

Your college experience is a great time for you to spread your wings and experience independence for the first time -- and staying debt free will help empower you to reach your goals.

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For more information: contact Kathy Crowder, HESC’s Sr. Vice President for Communications at 518-402-1448; Kathy.Crowder@hesc.ny.gov.

Reviewed: 10/16/2012