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Budgeting basics for the cash-strapped college student

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The financial freedom that comes along with living alone can be daunting for anyone with a wallet and free will. From a young age, children are taught the difference from needs and wants; shelter, food and clothing constitute needs while anything fancy and lavish is simply a want.

However, for many college students this line is blurred as credit cards become available and invisible student loan debt piles up only to be collected after graduation. A burrito from Chipotle and those new shoes you wanted quickly are justified as needs while rent payments fall behind and credit card debt rises. How can you escape the college debt trap? Sticking to long term budgeting plans by making smart short term decisions can help students keep track of their funds and plan accordingly.

Every college student should be aware of how much money they are borrowing to attend school as well as roughly how much money a month of living expenses costs. It is important to realize how much money is being borrowed so that student loans do not become an unexpected financial burden.

If you’re a rising senior, the Institute for College Access & Success recommends keeping track of the lender, balance and repayment status for each of your loans. This can help you avoid fees and extra interest costs. Additionally, being aware of your grace period, or how long you can wait before making your first payment, is key in staying away from late fees.

Understanding your monthly living expenses can help you budget your income. Failing to create a monthly budget can be dangerous because money flowing out of your bank account is not being tracked. Being left in the dark about your own spending habits makes it impossible to budget for emergencies and even expected costs such as rent and utilities.

Bankrate, a consumer financial services company, created a student budget calculator on its website for easy calculation of your expenses for the year. Dividing your total (total what? Loans? Money available?) by how many months you’re in school can give you your monthly expenses. Its list of expenses include school expenses such as tuition, textbooks, lab fees, library fees and printing fees, food and groceries, living expenses, professional fees such as doctors, hair stylists and dentists, travel fees, clothing expenses, personal toiletries such as hair care products and vitamins and more.

Budgeting how much you need for the entire year and then subtracting your expected income, loans, scholarships and grants can help you prepare for the year ahead of you. Although it is often stressful to create a budget, examining your income and your expenses can save you trouble in the end.

The U.S. News and World Report suggests shopping for discount textbooks and even giving yourself a weekly cash allowance rather than carrying around a debit card. For some people, spending physical cash makes them think twice about making a purchase while virtual money is easier to spend. Making small adjustments in your spending habits such as this can deter you from classifying wants as needs.

The unstable life of a college student means preparing for unexpected costs as well. From tuition costing more than planned to a car accident to water damage on an expensive textbook rental, it’s better to be on the safe side when it comes to emergency funds. Setting aside money for emergencies is a safe way to deflect future debt.

Creating a budget and sticking to it is difficult to do for any college student, but the benefits can save you thousands of dollars in the long run. It all starts with recognizing how much money you take in, how much money you owe and understanding that Chipotle is a want, not a need.

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