A budget helps you save for college and plan to repay student loans. Make smart lifestyle choices now that will help you invest in a college education. It doesn’t have to be difficult: Saving a little bit at a time on a regular basis can add up quickly!
Household Budgeting 101
Your family can see how much they can afford to save for college with the following steps to create a budget:
- Add up all your household income for one month.
- Add up your fixed expenses: essential costs like food, utility bills and car expenses like gas and insurance. Tip: Save your receipts and bills for a month to estimate these expenses.
- Subtract the total fixed expenses from your total income.
- Take out an amount for college and retirement savings (as much as you think you can afford), or if you’re paying back loans, for loan repayment. Remember, the larger your monthly loan repayment, the smaller your total repayment will be because you will pay less in interest.
- The money that remains can be spent on flexible expenses, such as entertainment and eating out, or put in your “rainy day” fund for those unexpected expenses that always come up.
Many money management software tools can help you save for college, too, but all you really need is a pencil, some paper and a commitment to keep saving.
Tip: Don’t get confused between essential costs and flexible expenses. Food is necessary, but eating dinner out, getting coffee drinks or buying lunch instead of making it are unnecessary additional costs.
Budgeting for K-12 Students
If you have a job or receive gift money, you can create your own budget, too. It might look something like this:
Income (per month)
Money from Grandma $20
Expenses (per month)
Movie night with friends $15
College savings $40
School lunch on Fridays $10
Flexible expenses $15
Saving for college
Be creative about saving for college! Designate a percentage of your earnings from a part-time job for college, or decide that part of all gift money will go in a college savings account. Put the money away as soon as you receive it, so you don’t spend it on other things.
You can also search for scholarships to help decrease your college costs. Use the Indiana College Costs Estimator to see the net price of attending an Indiana college, after your expected financial aid.