With college being one of the most rapidly-increasing expenses in modern America, it can be daunting to look at the financial planning needed. Even affluent families have plenty of preparation to do before their kids go off to college.
The pressures may be less acute, but you’ll still need to plan carefully when preparing a budget for college. Let’s take a quick look at some of the core budgeting principles to keep in mind while you draw up a plan.
Know What’s Available
The starting point is, of course, knowing what resources you have to offer. How much do you have on hand, and how much will be coming in over the years your child is in college? How much needs to be earmarked for other things in your life, like investments, or put aside for other big expenditures like another child leaving for college?
As always, a realistic appreciation of your financial resources is the central starting point. It is also important to remember that even if you are well off, a variety of scholarships or grants could be available. It’s unlikely these will cover the whole cost of college, but they are definitely worth researching.
Know What It Costs
The major costs of tuition and rental will be well-signposted and easy to figure out. However, it is important to keep in mind that these costs could be higher than expected if, for whatever reason, your child needs to stay in college for longer.
There is also the possibility of a semester or year abroad, which many students find highly valuable, but will generally incur additional costs. If possible, keep this in mind and budget for it, as the benefits are both academically and personally significant.
Young students have the dubious luxury of going to college without much in the way of a career. As they are supposed to be dedicating their efforts to their studies (however optimistic a hope that might be), they will have relatively little time for a job.
Indeed, many colleges place an upper limit on the number of hours per week that students may work. Consequently, when you are preparing a budget for college, it is essential to take the daily living costs into account. Remember also the lesser, but still notable, costs of things such as new computers or laptops and the expense of buying books.
The Budget Itself
Now that you have the expected major and minor costs and know your expected income, it’s time for the budget. One important factor is to be aware of when payments such as tuition and rent must be made and the payment plans for them.
If loans are involved, the same very much holds true with them. Plan your overall budget by these payment dates, and plan a smaller-scale budget for your child’s daily life, probably weekly.
As this is likely the first time they’ve had to stick to a budget like this, they’ll probably have difficulty at first, so you may prefer to send money in smaller regular amounts. You and your child will have to discuss this, and they will have to learn to stick to it.
The real key to preparing a budget for college is just that: preparing. Research and planning, coupled with realistic expectations, are the factors that make a difference between success and failure financially.
Your Top 3 College Questions: Answered
Need help organizing your college funding plan? Our free College Money Report™ can help. This report takes less than five minutes to complete and answers three critical questions for your family:
- How much tuition do colleges think you can afford?
- If you will qualify for grants and/or scholarships.
- How much will you be expected to pay out of pocket?
Ready to dig in? You can sign up for your free report by clicking here.
The real key to preparing a budget for college is just that: preparing. Research and planning, coupled with realistic expectations, are the factors that make a difference between financial success and failure.
Updated August 2024
