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Making It On a College Budget

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1 Making It On a College Budget
The Basics Welcome to “Making It on a College Budget: The Basics” sponsored by The Peer Financial Counseling Program from the (insert name of your campus’s sponsor(s)). My name is (counselor’s name). The purpose of this program is to help you to gain skills in managing your income and expenses effectively. This will help you make the most of the money you have for college. Everything about college costs money. You probably had a plan to pay for everything when you first entered college but you likely learned quickly that there were more expenses than you planned. Your income probably didn’t work out the way you thought it would either - two-thirds of Georgia students lose the HOPE scholarship in college because of their grades (Dee & Jackson Who loses HOPE? Attrition from Georgia’s college scholarship program. Southern Economic Journal, 66(2), ). So how do you make a plan to help you make it through? That’s what this presentation is all about. Please feel free to ask questions during the presentation.

2 What’s a Budget? A plan for spending and saving your money
The word “budget” sounds intimidating. It brings up images of long hours of writing, erasing, and calculating that only accountants could love. However, budgeting doesn’t have to be a tedious chore. With the technology we have today, keeping track of your income and expenses is easier than it’s ever been. Now that you’re a college student, one of the crucial lessons you will learn is it takes planning to get all the stuff done you’ll be required to do. Managing your money is one of those areas in which a plan can make the difference between being broke and being able to afford what you need. A budget is simply a plan for spending and saving your money. This plan should be flexible enough to change with your situation. Whether your parents pay for everything or you hold down 3 jobs, you should be more conscious of where your money goes. Think of a budget as a plan so you can spend and save money the way you want to.

3 Five Steps to Managing Your Budget
Know What’s Important to You (Needs vs. Wants) A key concept in budgeting is the idea of needs vs. wants. All of us have been confronted with the question “Do you really need that?” Behind this question is a value system that defines what a “need” is and what a “want” is. You should have a clear idea of what your needs and wants are.

4 What Is Important to You?
Values What is important to you Needs Basic things that are necessary for survival Wants Things we desire to make our lives more satisfying Your values determine the ways you spend your time and money. Your values are things that have relative worth, utility, or importance to you. For example food, church, housing, social activities, or a car may be important items that you will make room for in your budget. Some of the things that are important to you will be needs such as food, shelter, and clothing. Some of them will be wants such as eating out, designer clothes, or video games. Needs are basic things that are necessary for life and wants are things we desire to make our lives more satisfying. Consider using an activity: Money Messages or What’s Important to You are the suggested activities in the introduction. (2-3 minutes) Speaker – Let’s take a few minutes to share some of the money messages we’ve heard growing up. Did your parents or friends ever have any particular sayings about money? Maybe you heard things such as “Don’t spend money you don’t have” or “Money may not always make you happy but it sure can help sometimes.” (Call on a student or two to ask them about money messages) What about the things that are important to you? If you had $1,000 what would you do with it? (ask an audience member) What do you think that says about the things that are important to you?

5 Five Steps to Managing Your Budget
Set Your Goals What matters most to you? Staying out of debt? Getting a good education? Playing a sport well? Your goals are the specific steps you need to take to achieve what’s important to you. Setting your goals helps you define and prioritize those things.

6 Types of Goals Short-term: a week to six months
Intermediate: six months to a year Long-term: greater than a year Some examples of the different types of goals are: Short-Term: save money for a date, pay for a trip to an out of town football game, or pay for fraternity/sorority dues Intermediate: save for a spring break trip, study abroad, or buy furnishings for an apartment Long-Term: obtain a graduate or professional degree, buy a car, or buy clothes for a new job In other modules you can learn more about some ways to meet goals (such as investment tools), but for now we will just focus on the goals themselves. To help you determine your own goals take a look at Handout 1 (HO #1) we have given you. What are your goals? For each you will have to know: How much will it cost? Do some research to be sure you know. There’s nothing more disappointing than to save up for something only to find out it costs twice as much as you thought. How much do you need each month to achieve your goal? For example, if you want to fly to Florida in three months and airfare is $150, you’ll need to save $50 a month. What’s the target date? In other words, when do you want to reach this goal?

7 Five Steps to Managing Your Budget
Know Your Income and Expenses How many times have you asked yourself, “Where did all my money go?” If you don’t know the answer, then that was a time when you needed a budget. A budget is about providing information just as much as it is about controlling spending.

8 Income vs. Expenses Find out your income and expenses for a period
Much of the information you are trying to get is already there. You just have to uncover it. First, you need to know what income you expect to earn in the budget period. If you work regular hours at a job, figuring your income is easy. If you don’t work, think about all of the ways you get money – including your parents, financial aid, the HOPE scholarship – and how much you expect that to be. Income does not have to be from a job. Anytime you have one or your expenses, such as tuition, paid by someone else you have received income. When you think of income this way you will have a full understanding of how much it really costs for you to do all the things you do. Figuring out your expenses may be easy too if you have bills to pay. But where does the rest of your money go? To answer that question, it’s likely that you’ll need to keep track of all of your spending for a week or two. You can use a chart like the one in Handout 2 (HO #2) or simply put all of your receipts in an envelope. Can you show where most of your money went? Most people can’t! Consider using an activity – Tracking Your Spending is the activity suggested in the introduction. Find out your income and expenses for a period (such as two weeks, month, or semester)

9 Tracking Expenses Daily Expense Records Week of ___________
$Money Spent$ Sun Mon Tue Wed Thur Fri Sat Coke from machines 1 Gas in car 30 Eating out 5 12 15 Washing clothes Phone bill 45 Club dues 100 Social activities (going out w/ friends) Groceries 25 This tracking expense form is an easy way for you to keep up with everything you spend in a week. (Speaker: if you handed out the tracking expenses handout, remind the audience that this is a duplicate of what they have received). If you need to change some of the categories, feel free to do so. You can then easily total the rows and have a better idea about where you spend your money. If you don’t want to carry this form around, just hold on to all of your receipts, including cash) and fill out this form at the end of the day. If you don’t have a receipt from an expenditure, just make a quick note about it and fill in the form later.

10 But My Expenses Are Too Random to Budget !
Your budget should be flexible A flexible budget needs a flexible document One of the most difficult problems to deal with when you budget is all of the “random” or unexpected income and expenses that could occur throughout your college career. For example, you thought your book expenses would be $200 when the bookstore’s price for one book is $ and you have 6 more to buy. Or maybe your dad said he would send you $400 a month, but “accidentally” forgets for three months. Or that $15 an hour job you thought you were going to get falls through. How do you budget with all this random stuff happening in your life? The key here is flexibility – your budget should be flexible enough to change with your situation. A flexible budget needs a flexible document to record that budget. This is where technology helps. There are many software programs that assist with the budgeting task. You can use the Excel worksheet example we provide in Handout 4 (HO #4) or you can use one of your own making. A pencil, paper, and calculator will even work, but remember the budget categories for different time periods may be different, so leave some of the lines blank to fill in later. (For example you may take that trip to Florida one month, but stay home the next three months). Take a look at Handout 3 (HO #3) for more information on setting up a budget. This handout provides resources for the budgeting process. If you do not pass out the handout, you may consider writing the resources on a blackboard or telling the audience the websites to visit.

11 Five Steps to Managing Your Budget
Make a Spending Plan After you have a good idea of how you spend your money and where it comes from, it's time to look forward and put together a spending plan that will allow you to meet your financial responsibilities and reach your goals. Flexibility is key, so your plan is only a guideline and not written in stone. While you are making your plan keep in mind your values - what is most important to you.

12 A plan for future income and expenses
Spending Plan A plan for future income and expenses A spending plan is a plan for future income and expenses that allows you to compare what you planned with what actually happened. A spending plan is also another name for a budget. In our spending plan example Handout 5 (HO #5), Sam has columns for “planned” and “actual” income and expenses. Examples of expected vs. actual expenses are when your cell phone bill is higher than anticipated, or you have extra deductions in your paycheck that you didn’t expect. You have to decide the period of time for which you’re budgeting. It’s a good idea if the period you plan for is the period that corresponds to your income. So if your job pays you every two weeks then you can set up the plan for a two-week period. If your parents give you money every month, then let a month be your spending plan period. Sam Sample’s spending plan was for the semester. It’s tough to make a spending plan that works for such a long period of time.

13 Spending Plan for August 20XX
Spending Plan - Income Spending Plan for August 20XX Expected/ Budgeted Actual Difference Income Grants 1,500 1,250 (250) Scholarships 500 Loans 1,735 1,550 (185) Job (your salary $6.50/hr 10 hrs/week) 215 235 20 Parents contribution 1,350 Other Total Income 5,300 4,885 (415) Here is a sample way of setting up the income portion of your budget. In this example, Sam expects to receive grant money, scholarships, loans, and money from his parents in addition to income from a job. However, at the end of the month, Sam reviews his spending plan and realizes that he did not receive as much income as he expected. The month of August will likely have a different spending plan than the month of September because grants, scholarships, and loans are received during this month. However, when the expense part of the spending plan is created, Sam will realize that there will expenses that only occur in August (and most likely again in January) such as room and board costs, tuition, and books.

14 Spending Plan - Expenses
Spending Plan for August 20XX Expected/ Budgeted Actual Difference Academic Expenses Tuition & Fees 1,375 Books 600 750 (150) Living Expenses Rent/Dorm 1,245 Food – meal plan 1,120 Food – other than meal plan 80 100 (20) Social Activities 120 150 (30) Total Expenses 4540 4740 (200) Here is the expense half of Sam’s spending plan. Notice he has split his expenses into different categories. He has also left blank rows for things he may not have thought about when he initially created his budget. What other items do you think Sam should include? (Get the audience to provide a few answers) Think about some of the items that were on the tracking expense form. You will most likely fill in the rows of expenses based on the items from your tracking forms. Again, there are expenses on this month’s spending plan that may not occur each month. Also, notice that the actual social activities expense and non-meal plan food expense were greater than he expected. This is where flexibility comes into play. If you have a loan from the Federal Student Loan Program, you don’t have to make payments on that until six months after you leave school. If you take out a student loan, remember that you’re committing that once you’re out of school, whether or not you have a degree or a job, you will reduce the amount you have to spend on everything else by the amount of your student loan payment. Of course, if you’re using credit cards to pay for college, those payments are due now. Next we will see what Sam’s spending plans for his first three months in school looks like.

15 Expected Actual Difference August September October Income Grants 1500 1250 -250 Scholarships 500 Loans 1735 1,550 -185 Job (your salary) 215 235 20 255 40 315 Parents Contribution 1350 350 Other Income Total Income 5300 4885 -415 565 605 665 Academic Expenses Tuition & Fees 1375 Books & Supplies 600 750 150 Miscellaneous 35 55 25 -10 Living Expenses Rent/Dorm 1245 TV (cable) Food (school meal plan) 1120 Food (other than meal plan) 80 100 Personal (toiletries) 75 60 -15 -20 Entertainment -60 Social Activities 120 30 Clothing & shoes -75 50 -50 Cell phone 70 15 ETC. Total Expenses 4980 4945 -35 640 570 -70 615 Income Minus Expenses 320 Here is a sample of what Sam’s budget looks like after 2 months in school. Notice how in September and October there is no expected income from grants and scholarships and such but there is also no expense for the dorm room, tuition, or meal plan. Another thing to remember about a spending plan is that it needs to be flexible. If you look carefully at some of the spending categories for October, the expected amount has changed. If you create a spending plan and realize that the expected amount is too little or too much, you should simply change your spending goals. Also, it appears that Sam plans to work more during the month of October since he was overspending or cutting it close during the previous two months. Remember, these are just samples. Each person will have their own categories they need to include in their personal spending plan. These categories will primarily come from tracking your spending and knowing where you spend your money on a regular basis. Consider using an activity: Make A Spending Plan is the suggested activity in the Module Guide (8-12 minutes). Most people will NOT learn how to make a budget from this presentation without an activity.

16 Five Steps to Managing Your Budget
Stick to Your Spending Plan ! A spending plan is useless if you don’t actually follow it. You have to make every effort to stick to your spending plan so you can afford what you need and hopefully what you want. If you start the budgeting process by identifying what is really important to you it will help you stick to your plan. You are more likely to stick to it if you remind yourself why you are doing this – to meet the financial goals you have set for yourself. Do you really need that costly cell phone option when you are saving for that all-important convertible car? There are many ways to help you stick to your plan. One is called the “jar” method. Here’s how it works: Label 5 jars (or cans, boxes, envelopes, etc.) as follows: FFA – Financial Freedom Account – 10% goes in and is not taken out for anything other than investments NEC – Necessities – 50% of after-tax income goes in – for necessities EDU -- Education – 10% of after-tax income LTSS – Long Term Saving for Spending – 10% of after-tax income to save for big-ticket purchases or down payments GIVE -- Giving – 10% of after-tax income PLAY – 10% of after-tax income If you’re self-employed, you might start with a TAX jar and put 20% of your income in that before you divide up the rest. Since keeping cash around isn’t recommended, another approach is to open separate online accounts for the FFA, EDU, LTSS, PLAY, and TAX funds and put the GIVE and NEC money in checking accounts. For more information read

17 Sticking to a Spending Plan
Develop Self-Discipline Control Stimuli Control Decisions Control Responses Control Consequences Control Your Money! While budgeting provides information, it is also a tool to help you develop discipline. It helps you know your weaknesses and encourages reasonable expectations. Discipline is all about control. You should: Control stimuli * don’t go window shopping to see that purse you wanted Control decisions * decide to only eat out once a week Control responses * if you can’t afford it, just say “no” Control consequences *pay with cash instead of charging it so you won’t have to pay interest later With the effort you put into controlling yourself, you can eliminate wasteful spending and save for things that are really important to you. If you have access to the Internet, play the Saturday Night Live comedy skit “Don’t Buy Stuff You Can’t Afford” that is a spoof of financial advice. It’s a great way to make the point about self-discipline without being “preachy.” Click on the “Control” icon above for the hyperlink, or check it out at

18 Evaluate Your Spending Plan
Questions to ask yourself How well did you stick to the plan? What areas did you have problems in? Were you reasonable in making your goals? What changes need to be made? To see how well you did, you should evaluate your spending plan. These questions are important to answer to get an even better idea of your spending habits and income flow. One of the reasons why many people believe their income and expenses are so random and unpredictable is because they have not put much effort into any budgeting activity. Many of the unexpected income sources and expenses that were so hard to anticipate before will become easier to plan for after you have this information over a few weeks. Give a door prize to the person who can come up with the best way to save money or the most ways to save money. For ideas on reducing expenses, refer to HO6, Money Management Options: 75 Ways to Save Money.

19 Five Steps to Managing Your Budget
Know what’s important to you (needs vs. wants) Set some goals Know your income and expenses Make a spending plan Stick to your spending plan! In summary, here again are the five steps to managing your budget. Presenter: You could ask a member of the audience to recall the 5 steps to managing a budget – from memory. Give a prize to the student who can correctly name all 5 steps.

20 For individual help contact:
The Peer Financial Counseling Program (insert web address, phone number, and/or ) If you ever need one-on-one assistance, you should contact the Peer Financial Counseling Program. They can refer you to helpful resources. (Insert your school’s info.) Note to presenter: Now would a good time to recruit new counselors. You could say: “If you would be interested in becoming a counselor, please feel free to contact us.” Don’t forget to ask participants to complete and return the evaluations (HO#9)!

21 Special Thanks to... Special thanks to the organizations involved in bringing this module to you.

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