College students nationwide are bracing themselves for the upcoming school year, a year that will look completely different from other years due to COVID-19.
If your undergrads are home this summer, this is good time to talk about college budgeting. Budgeting has always been important for college students, but especially so this year because of the financial strain COVID-19 has created.
Here are some tips for college students and parents on how to create a realistic and flexible college budget for the 2020-21 year.
1. Have the Money Talk
Find a time to have a transparent conversation about finances. Some questions and scenarios families might want to address include:
• “Should parents contribute, and if so, how much?”
• “What if you have trouble repaying your debt?”
• “How much federal financial aid can our family really expect?”
2. Create a Budget and Plan Ahead
Students should be completely honest with themselves when determining their expenses. They should list the essential expenses, such as housing, books, utilities, transportation, laundry, and groceries, while not leaving out the “fun” expenses, such as entertainment or possibly studying abroad. Make this budget as concrete as possible. Create categories, break it down by month, and review it as the school year progresses.
3. Consider Hidden Costs and Always Plan for the Unexpected
Families should also plan for hidden college costs, like housing during internships and traveling back home for fall, winter, spring, and summer break. They should also set aside money for emergencies. As COVID-19 has shown us, it’s important to be prepared for just about anything.
4. Track Your Spending
Creating the budget is only one part of the battle — students also need to stick with it throughout the year. Students can track their purchases via several apps including Mint, YNAB, EveryDollar or PocketGuard. These apps can also be used for budgeting over short and longer time periods.
5. Establish Credit
Students can build credit by opening a student credit card with a bank or credit union. They could also become an authorized user on their parents’ credit card.
Here’s a quick list of strategies students can use to save and/or make money throughout the school year.
• Take advantage of student discounts
• Cancel online memberships not frequently used
• Switch to cheaper phone plans
• Lower utility bills by saving water and energy
• Buy groceries in bulk at discount grocery stores
• Limit takeout orders
• Avoid paying interest and late fees on credit cards
• Use a car less and walk or bike when possible
• Search for a part-time job that is manageable and that doesn’t interfere with schoolwork
If you’d like to discuss college budgeting further, reach out the team at Harris Financial Advisors, Inc. today. If you missed it, also read our latest post on financial options for students during this pandemic.