Budgeting For a College Education, Need vs Want Worksheets

My only response to the money saving tip to, "cut back on a latte" is to groan! Really, a latte? Can't we do just a little-bit better for our college students who are struggling to save for their college education? Telling them to cut back on what may well be their only splurge on an already tight budget seems almost minimalistic. I say, sip away! We can find a better way to save an extra $50 a month.

I know that saving $50 a month may be a drop in the proverbial barrel of educational expenses. However, it is a start and until you can manage to keep that $50 in savings, you are going to find less educational choices for you to consider. So, really how can a college student save an easy $50 a month? Well, for starters do you really need to upgrade to a Droid—right now? Or can you hang with your current palm device for a few more months? Or can you resist a second order of that bloomin' onion or cocktail? If you're still hungry or thirsty, wait to fill up less expensively later when you get home. When trying to save for your education, the point here is to identify what you need versus what you want. This one simple task can make or break your college budget strategy.

When money is limited, college students will find an increased need to restrict spending and define budget needs. Discerning your needs from your wants becomes a critical requirement, and to some degree, a painful dividing line. Tallying-up a list of your own needs (vs) wants  becomes a very good start to repairing the gaping hole your money seems to keep falling through.

The chart below offers you two options; needs and wants. The goal is to get you thinking about your own needs versus wants. I've completed a couple of rows to give you a few ideas as to where to start with your own needs and wants discovery.

A big dinero no-no to avoid is rationalizing your wants into needs. When completing your informational needs and wants, don't conduct any self-sabotaging deeds. Do Not convince yourself that because a newspaper subscription keeps you abreast of current events, that it is just as important to have a beautiful glossy color paged fashion magazine subscription to keep you current on the newest styles. The two are vastly removed from one another!

When completing your budget worksheet it is helpful to think thoroughly about what your wants are and what your needs are. As an example, a bus pass is considered a need and also a fixed college budget expense, while....

...a home made "kegerator" may be frugal, but it is still considered to be a want and totally is a flexible college budget expense.

A clear understanding of your college budget needs-and-wants spending breakdown, is a vital calculation to finding what your fixed and flexible expenses are going to be. Some bills and expenses are the same month after month, while some allow for a little wiggle room.

Your rent or mortgage payment is more likely to be the same each month, as are your phone bill, probably utility bill, and possibly your transportation—all of which are needs. Basically, your monthly bills, are for the most part, your fixed expenses. The hair appointments, music CDs, Netflix, and downloading would all be flexible expenses.

Getting an idea of how these items fit into your over all college budget strategy will show you how much you will have left over for flexible expenses, savings, and mad money. Here's a fixed expenses chart to get you started:

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Next, calculate your flexible expense costs (wants). These are the expenses you can cut down, cut out, or trade for when wanting a particular item. Note that this chart is looking at expenses on a WEEKLY basis for greater management—multiply the total by 4 to get your monthly output:

You can go one step further and add up all of the other expenses that surprise you like, birthdays, travel to see family and friends, annual vacation, and car/home repair. You add these items together and divide by 12 (months in a year) to give yourself better monthly college budget management, or as this chart calculates 52 (weeks in a year) for weekly management.

Go ahead and take a deep breath, because you are almost done. Now, how much money do you make a month -or- how much money do you have to work with, after taxes? Lets take a look at how all of your expenses subtract from your monthly income. When everything college budget is said and done, how do your college saving expenses add up?

• Red (more money going out then you bring in)
• Black (money left over after paying bills and such)
• Balanced (the money you make is exactly what you have to pay out)

529 College Education Savings Plan:

This is California's tax-advantage 529 plan, and called the ScholarShare College Savings Plan. An agency in the State of California sponsors this plan, the ScholarShare Investment Board, and is managed by Fidelity Investments.

• Tax advantages - Your earnings are allowed to grow tax deferred and any qualified withdrawal is free of state (California) and Federal income tax.
• Minimum initial investment - If you automate your investment, $50, or $15/monthly ($45/quarterly)
• Combined account maximu - $350K
• Yearly account maintenance fees - Zero fees

Click Here to Shop 529 Plans

So, do you find any stray dollars after doing your budget? Or did you find you are in the red paying out more than you bring in? If red is your college color, don't despair. By completing your expense worksheets you have taken the first step to understanding how to manage and budget for your college education.

By having a college budget strategy, and figuring out your flex vs fixed expenses, you can see where adjustments can be made to your flexible spending. You have to understand (and make it your mantra) that you can make the necessary changes using your flexible expenses. The simple action of feeding your fixed expenses with some of your flexible money can quickly ease your college financial worries. Oh, and that latte we talked about in the beginning? It might just start tasting better than it did before.