Dear Carrie: I'm in college, and next semester my student loan goes directly to me for the first time. Since it must last the whole school year, I'm worried it won't make it.
I've already written out a budget, but I've never been able to stick to one before, so I don't have much faith in myself. What else can I do to make this money last? -- A Reader
Dear Reader: Great question -- and so important, not only for managing your school finances but also for preparing yourself for the not too distant future when you'll be out of school and on your own. So, start by giving yourself a little credit.
You're aware that you could have a financial problem and you're looking for ways to avoid it. That's smart thinking. Now, let's turn that smart thinking into a smart plan of action that will help you live within your means.
THINK DIFFERENTLY ABOUT A BUDGET
A budget can often seem like a list of what you can't afford to do: can't go out to dinner, can't buy those concert tickets. But budgeting is really about what you can do. In fact, don't think of it as a budget at all -- think of it as a list of goals you want to accomplish:
1. You need to cover essentials like tuition, rent, utilities, food, schoolbooks and transportation.
2. You want to have some money for fun, whether it's taking in a movie or buying something new.
3. If you can swing it, you want to save some money for future needs to cover an unexpected expense or a special event.
All these goals are important, and they can be a great motivation for managing your money wisely. (Just think how good you'll feel when you achieve them!) Now, of course, you have to make it happen.
CREATE A MONTHLY "PAYCHECK" TO COVER BOTH NEEDS AND WANTS
I'm going to assume that you'll get your student loan money in a lump sum each semester. Think of this as your income, dividing your semester funds into a monthly "paycheck" for yourself.
Now put some realistic numbers on paper. First, list your essential monthly living expenses -- your needs -- and the dollar amounts that go with them. Then make a list of the extras you'd like to have but can live without -- your wants -- such as entertainment, dining out, even clothes. Estimate how much these might cost each month. Finally, add these two together and subtract the total from your monthly "paycheck."
Do you have enough to cover everything? Great, you can meet goals 1 and 2. Is there anything left over? Even better. You can meet goal 3. If you're falling short, don't despair. You may need to make some trade-offs, such as going out less often. You may need to get a part-time job to make ends meet. But it's your choice -- and you're in control.