Budgeting

 Budgeting is really a type of planning. And, like other forms of planning, it creates freedom. When you have a budget and stick to it, you can relax. You are confident. You don't have to worry about whether you can pay your bills. Budgeting allows you to make choices about money that are consistent with how you want to live.

After you complete Exercises 1-4 found on the next several pages, you will have a budget system in place. Monitor your money each month and set up a cycle of budget-monitor. This will allow you to continually refine your money management process. Soon you can be controlling your money, instead of having money control you. When you discover that the money coming in is less than the money going out, you have three options. You can increase money in, decrease money out, or both. Generally, it is easier to do both.

There are several ways to increase your income while you go to school. You can get scholarships and grants. You can borrow money, inherit it, or receive it as a gift. You can sell property, collect income from investments, or use your savings. Or you can increase your money supply by earning it at a part-time job. (See the two attached pages titled, "Find ... ...money.")

If you work while you go to school, you can earn more than money. Working helps you gain experience, establish references, and expand your contacts in the community.

Regular income, even at minimum wage, can make a big difference. Look at your monthly budget to see how it would be affected if you worked just 15 hours a week (times 4.3 weeks in a month) for only $5 an hour.

Learning how to control your expenses is a powerful tool for managing money--even more powerful than increasing your income. There are many ways to decrease what you spend. The following list offers suggestions on how to control outgoing money.

• Look to the items that cost the most and determine how to save in these areas.
• Use the telephone to save time, gasoline, and money.
• Comparison shop and be patient while waiting for a good sale price on an item. Try second-hand stores, thrift stores, or garage sales.
• Be aware of quality--make sure your purchases are well-made and will hold up.
• Keep receipts for proof of purchase in case the product is defective.
• Complain if you didn't get your money's worth.
• Use coupons and generic brands whenever possible.
• Cook for yourself and purchase foods which offer the best nutritional value for your money.
• Plan your wardrobe in advance--stick to one or two color schemes. Find sale items that you can mix and match with other items already in your wardrobe. Shop for next year's clothes at end-of-the-season sales.
• Conserve energy--turn out lights, keep doors and windows closed while running the furnace or air conditioner.
• Keep your housing costs reasonable--share with a roommate. Be a good tenant and pay your rent on time. Offer to do repairs or maintenance in exchange for reduced rent.
• Pay cash for purchases to avoid interest charges. If you do use credit, pay off the balance immediately to avoid finance charges.
• Fix things yourself. Changing your own oil or doing your own repairs can save you many dollars.
• Notice what you spend on "fun." (See the page titled, "Free fun.")
• Use public transportation or car pools if you are not within walking distance.
• Postpone purchases. What seems like a necessity today may not even cross your mind the day after tomorrow.
• Shop on a full stomach. We tend to "want" when we are hungry.
• Leave your cash in the bank. Do not withdraw your cash until you have made a smart decision to spend that money.
• Create a budget and stick to it. BE HONEST!!
  
  

EDUCATION COSTS

A college education in one of the most durable and worthwhile investments you can make. It is a safe investment and will last a lifetime. When you invest in yourself, you can't lose. Education pays off in salaries, job promotions, and career satisfaction. It is also worth investing in again and again as circumstances change and you need to update your skills.

EXERCISE #1: Determine exactly what it costs you to go to school. Fill in the blanks. Use totals for a semester.

Find...

You can find money for your education from the Federal Government, most state governments, parents, other relatives, banks, and the college or school you attend. Programs vary and are available for students with differing needs. The programs also change. Be sure to get the most current information. Look for money in the following places.

1. Pell Grants, based on need, are awarded by the school you attend and are financed by the Federal Government. This is the largest federal student aid program. Pell Grants provide a foundation of financial aid to which aid from other sources may be added. The Department of Education guarantees that each participating school will receive enough money to pay the Pell Grants of its eligible students. Money received through a Pell Grant does not have to be repaid.

2. Supplemental Educational Opportunity Grants (SEOG) are designed to add to other forms of financial aid. There is no guarantee that every eligible student will be able to receive an SEOG. Money is limited and application deadlines are critical.
3. College work-study (CWS) gives you a chance to earn money to help pay for your educational expenses. Your pay will be at least the current federal minimum wage and may also be affected by the type of work you do and the skills required. Jobs may be on or off campus. Your financial aid administrator can assign work hours based on your class schedule, your health, and your academic progress.
4. Perkins Loans are available directly from a school that has received money for this purpose. These long-term loans are based on financial need and have low interest rates. The loan is repaid in monthly payments after you complete your education.
5. Stafford Loans are low interest loans made by a lender such as bank, credit union, or savings and loan association. They are insured by a guarantee agency in each state and reinsured by the federal government. Like Perkins loans, these are repaid in monthly payments after you complete your education.
6. PLUS Loans and Supplemental Loans for Students (SLS) are made by lenders such as banks, credit unions, or savings and loan associations. They have variable interest rates, adjusted each year. PLUS loans are for parents who want to borrow to help pay for their children's education. SLS loans are for student borrowers. You don't have to show financial need for either loan and, generally, repayment of principal and interest begins 60 days after the last loan disbursement. If a deferment applies (including a deferment for being in school), repayment of principal can be postponed.
7. Scholarships are available through most colleges for outstanding performance in athletics, academics, or the arts. Fraternal, service, educational, and social societies like the American Association of University Women, Elks, Rotary, Kiwanis, Sertoma, or Lions often provide grants that don't have to be repaid for local students.
8. The Veterans Administration has money available for some veterans and their dependents. The War Orphans Educational Assistance, Air Force Aid Society, and Army Educational Assistance programs are set up for children of military personnel.
9. Active military personnel can take advantage of financial aid programs by contacting their local personnel office.
10. Company assistance programs, provided by employers, offer financial aid for employees to attend school while working.
11. Social Security payments are available up to age 18 for unmarried students with a deceased parent or a parent who is disabled or drawing Social Security benefits.
12. State vocational rehabilitation offices usually have financial assistance for people with visual impairments, with hearing or speech difficulties, or with other physical disabilities.
13. The U.S. Bureau of Indian Affairs has financial aid available for Native American students.
14. The local branch of your state employment office provides information about two government programs which are set up to train the unemployed. These programs are JTPA (Job Training Partnership Act) and WRP (Worker Re-entry Program). Both provide money for going to school.
15. Relatives often provide financial help for a dedicated student. Someone who would be reluctant or unwilling to lend you money for a car, a new business, or a trip to the South Pacific might be honored to help you get an education. A sincere, straightforward request is never insulting.
16. Personal savings comprise the bulk of money spent on higher education. Use money from savings accounts, bonds, stocks, or trusts set up by others to support your education.
17. Employment is another way students can get additional money. Working in a job related to your future career field can supplement your education as well as your finances.
18. Sell something. Find something you need less than an education and sell it. This may be an option of last resort, but it is an option. Consider the money you have tied up in a car, motorcycle, horse, piano, house, or hobby.

Money...

MONEY MONITOR

EXERCISE #2: This exercise is an opportunity to observe how money flows into and out of your life. You will record all the money you receive and spend over the course of one month. This is no small task. It requires commitment to carry a pen and a Money Monitor and to use them, even when it's inconvenient. Doing so can give you power.

1. Tear off the Money Monitor form on the following page. You can make photocopies of the form to use it each month.
2. On the left-hand side of the form there is a column marked "Money In." Record here all the money you receive during the course of a month. Include money from jobs, family, loans, veterans' benefits, and any other sources. For example, if you take money out of a savings account, write it down as "Money In." The "Money In" column is divided into two sub-columns. Record the date you get the money, where the money came from (under "Date/Note") and the amount.
3. Record "Money Out"--the money you spend--by categories. Under "Money Out--Categories" record rent, phone bills, utility bills, car payments, credit card payments, and any other bills you pay every month. Other categories might include food, transportation, entertainment, savings, and clothing. Many people have enough categories to fill two or three pages of a Money Monitor. If an expense item doesn't fit into a category, put it is a "miscellaneous" category. It is important to record everything you spend. Write down the date you spent it, a brief description of what you spent the money on, and amount you spent.
4. Record your "Money In" and "Money Out" every day for the next month. Under "Amount" you can also record how you paid for the item by using simple codes--"$" for cash, "chk" for check, and "cc" for credit card. A handy way to keep track of cash spent is to fold a 3x5 card over the cash in your wallet. Every time you take out a bill to buy something, you will see the card. Record the expense on the 3x5 card and write it down in your Money Monitor later.
5. At the end of the month, add up all of the columns. Then use these totals to construct a budget in Exercise #3.

After you create a monthly budget, you can use these Money Monitors as a navigational device to keep yourself headed in the direction of your budget. After a few months of recording income and expenses, you're likely to notice patterns. You can then develop your own style of making money work for you rather than against you.

FREE FUN

Sometimes, it seems that the only way to have fun is to spend money. Not true. Aside from free entertainment available through your school and community, your imagination is the only limit on free fun. Many of these ideas may sound crazy. Pick a few that sound fun and experiment. Add your own ideas.

THE MONTHLY BUDGET EXERCISE

THE MONTHLY BUDGET

EXERCISE #3: Use this exercise to develop a plan for spending your money month-to-month. Complete the Money Monitor (Exercise#2) before doing this exercise. Figures from month-to-month usually change because of periodic payments such as tuition, insurance, taxes, etc., so revise this as needed.

1. Tear out the Budget worksheet on the following page. You can photocopy it before you begin to use this form every month.

2. At the top of the form under "Money in from:" list all your sources of income from your Money Monitor. In the left-hand column, write down where the money came from. In the middle column, write down the amount.
3. Under "Money out to:" list all the "Money Out" categories, titles, and totals from your Money Monitor. List the amounts in the middle column.
4. Add up all the "Money in from" items and write the total in the box labeled "Total cash income." Add up the "Money out to" items and write the total in the box labeled "Total cash expenses."
5. Subtract total cash expenses from total cash income, and write the result in the box labeled "Money left" under the "This month" column. This is your monthly surplus--or deficit.
6. Now you can decide how much surplus you want next month or how large a deficit you can survive. When you have determined your goal, write it in the box marked "Money left" under the "Next month" column.
7. Next, adjust your "Money in from" categories (income) and your "Money out to" categories (expenses) to meet your goal for next month. For example, if you ran a $50 deficit last month and you want to run a $50 surplus next month, increase income by $100, reduce expenses be $100, or do some combination of both.
8. Write the amounts for your adjusted budget categories in the column labeled "Next month." Then add them all up to make sure you will reach your goal.

Other budgeting tips:

Use old receipts, utility bills, canceled checks, and credit card records as sources of information for your budget. Also, remember to include any unusual expenses you can predict, such as tuition, medical bills, automobile insurance and licenses, car repairs, and vacation.

Each month, examine the previous month's Money Monitor and use that information to refine your budget. Be REALISTIC about what money is likely to come in and go out.

THE LONG-TERM BUDGET

EXERCISE #4: A long-term budget works very much like the monthly budget.

1. Use a photocopy of the Budget Worksheet and title the columns as "Draft budget" and "Final budget" to represent either a year or the length of one school term. (See the example at the bottom of this page.)

2. Write down the same income and expense categories you used in exercise #3: "The Monthly Budget." Now, under the column "Draft budget," predict the totals for each category.
3. List any unusual income or expense items you can predict, such as lump-sum grants (money in) or tuition payments (money out).
4. Total the "Money In" and "Money out" items, subtract the total expenses from the total income, and write the result in "Money left."
5. Don't panic. It is common to have more money going out than coming in the first time you make a long-range projection. The effectiveness of this exercise may be finding out that you are spending more than you have. If that is the case, try it again using the "Final budget" column. Re-work your budget until Money Out is less than Money In. Be realistic and don't cut necessary expenses (like food and clothing).
6. When you have figured out a workable plan, write your revised projections in the right-hand column that you labeled "Final budget."