Transcript BYOB Build Your Own Budget

BYOB
Build Your Own Budget
Budgeting
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What is a budget?
◦ Make the most of your financial resources
◦ Determine monthly allowance
◦ Plan how to spend limited funds
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Why create a spending plan?
◦ Reduce unnecessary expenditures
◦ Unsubsidized loans accrue interest
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Who can benefit?
◦ Everyone
Creating a Realistic Budget
Three easy steps….
1. List the income you expect and when
you expect to receive it
2. Write down your expenses – keep a
list as they occur
3. Add up the two columns and find a
balance
Cost of Attendance – 10 months
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Fixed College Expenses
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Tuition
Health Insurance
USMLE Step exams
Books/Supplies (year)
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M1 = $2400
M2 = $1,020
M3 = $930
M4 = $560
Cost of Attendance – 10 months
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Variable College Expenses
◦ Living expenses - $11,790 or $1,179/m
◦ Transportation - $2,412 or $241/m
◦ Personal stuff - $3,188 or $318/m
◦ Total = $17,390 or $1,739/m
Spending Guidelines
Food
20%
Health care
12%
Transportation
12%
Misc
16%
Housing
40%
Source: U.S. Bureau of Labor and Statistics
Budgeting the Cost of Attendance
Guideline %
Per Guideline
Student A
Student B
Housing – 40%
$695
$650
$550
Food – 20%
$348
$308
$300
Transport – 12%
$208
$208
$256
Health Care – 12%
$208
$208
$208
Misc – 16%
$280
$275
$245
$1,739
$1,649
$1,559
Monthly Budget
COA = $17,390/ 10 months = $1,739 per month
*Tuition/Fees, Books/Supplies, USMLE have their own budget.
What is $3 a day worth?
Daily Cost
$3.00
Monthly Cost
$90.00
Months in Year
12
Total Yearly Amount
$1,080.00
Total borrowed after 4 years
$4,320.00
Annual Interest Rate
6.8%
Interest after one year on first loan
$266.00
Interest after four years on all four loans*
$630.00
Interest during grace period*
$147.00
Total owed at repayment
Monthly loan payment
$58.66
Total payments
$7,040
Total interest*
$2,717
*4 yrs school, 6 month grace, 10 year repayment
$5,097.00
Financial Aid Adjustments

Return excess funds each semester
◦ You have 120 days from disbursement to
return any portion of your loan without
penalty (it’s in your promissory note)
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Borrow less and ask for more later
◦ Ask for budget adjustments for car repairs,
medical expenses, daycare, computer
purchases, etc.
Budget Pitfalls
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Beware of variable expenses like…
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Parking
Eating out
Gifts
Cell phone
Class Dues
Dry cleaning/Laundry
Expenses paid yearly
“Miscellaneous”
“Personal finance is 20% head
knowledge and 80% behavior.”
-Dave Ramsey
author of “The Total Money Makeover”
Save on Groceries
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Become a strategic shopper
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Never go shopping hungry!
Stick to your list
Stock up on items when they are on sale
Start a price book so you know when those
items typically go on sale
◦ Use coupons when items are already on sale
◦ Know who will double or triple your coupons
◦ Know where to find coupons
www.couponmom.com
Save on Housing – House vs. Apt
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House Costs
◦ Electricity and gas
◦ Water, trash, sewer
◦ Yard maintenance
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+$75
+$65
+$25
Time Costs
◦ Yard maintenance
◦ House cleaning
4 hours
4 hours
Total possible monthly savings: $165
Total time savings: 8 hours
Save on Transportation
Raise insurance deductible to $1,000
Consider dropping comprehensive or
collision
 Shop around for insurance
 Maintain it
 Repair it
 Sell it
 Car pool
 Public transportation?
 Move closer to campus
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Save on Entertainment
Rent a DVD vs. going to a movie
 Take a few bucks and leave your wallet at
home
 Volunteer for local events
 Swap and share
 Do you really need cable?
 Take poor friends with you!
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Making Your Budget Stick
Have a plan and write it down
 Eliminate temptations
 Use Cash
 Prioritize your spending
 Reward yourself when you meet goals
 Think long-term
 Find a system that works for YOU
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If you aim at nothing…….
you’ll hit it every time.
What’s next?
Understanding Credit
November 14th at Noon
S255