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Money Coach

Before you pack your bags for college, plan your budget

Going off to college this fall? Remember that college is a time for you to learn money management skills because it will be the first time you'll be handling money without parental supervision. Whether your parents will be supporting you financially or you opt for a part-time job, it is crucial for you to learn how to budget now so you will have proper money management skills in the future.

So before you pack your bags and head out for college, sit down now and use these tips to help you plan out a budget.

The first step in developing a college budget is knowing what costs you will incur. These costs can be broken down into two categories: fixed and variable. Fixed costs can include tuition, rent or room and board, car payments, car insurance and parking fees. These costs are set figures.

Variable costs can include entertainment, gasoline, food, utilities, hygiene necessities, clothes, car maintenance, books, phone bills and club dues. These costs can vary from month to month.

Once you know your fixed and variable costs, you need to determine if your sources of income will cover these costs. Income can include pay from a part-time job, allowance from home, grants, scholarships or loans. If your estimated expenses exceed your estimated income, then you need to identify ways to reduce your expenses or increase your income.

You will also ned to determine what type of bank accounts will be appropriate. It is probably best to get checking and savings accounts so that you can save as well as pay your bills. Look for banks that offer checking accounts with no minimum balances and no monthly fees, and a savings account that can be used as overdraft protection for the checking account.

If you are going to college close to home, you can go ahead and set up these accounts now. If you are going to college far away from home, you can wait until you move there before you set them up.

Once you get to college and start spending money, you may realize that the original budget needs to be reworked. You may find out that you need more money or that you have way too much money to waste. Either way, you'll need to make adjustments.

And remember, learning how to manage your money now will prove invaluable later.
Published Aug 05 2010, 10:31 AM by moneycoach
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