Budgeting for college

August 2nd, 2013 Jeff Burkhart

According to the study How America Saves for College 2013, one-quarter of families don’t save for college because they believe the student will qualify for enough scholarships and financial aid to cover the costs of college. In reality, only 61 percent of students received scholarships and those scholarships only covered 29 percent of their total college costs.

Families should talk about paying for college and formulate a plan that will cover the college costs left after scholarships and grants are applied. Creating a budget for school is a key step in understanding the total cost of college and what will be affordable.

For students it’s easy to lose track of where money goes. Small daily purchases add up quickly, and there may also be some larger expenses such as car insurance, car payment or cell phone, that are either already the student’s responsibility or will be soon. Knowing exactly how much money is available and how it should be spent gives you control over the situation.

A budget can also help you:

  • Know if you’re spending too much on certain things.
  • Stay out of financial trouble.
  • Avoid impulse spending.
  • Set and reach financial goals.

A budget is created in three simple steps:

  • Track your income and expenses for one month.
  • Subtract your expenses from the income. Think about the result – are there areas where you can cut costs?
  • Maintain your budget on a monthly basis. Keep looking for ways to reduce spending or increase income.
  • Use an in-school budget calculator to figure your budget.

About the author

Jeff Burkhart is Regional President at MidWestOne.

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