Since most students and their families already taking out loans just to make tuition payments, it is important to factor in other costs, as well as ways to save, that sometimes go unrecognized. Most students end up with debt after graduating college. Don’t make the debt worse than it has to be. Here are some tips for dealing with costs that you may not have given much thought.
Make a Budget
The number one financial mistake students make is not having a budget. Budgeting is a key component of financial planning. A quick online search will give students plenty of resources that teach how to design a simple budget. Budgets don’t need to be complex. You write down all your estimated expenses and all your estimated income (or other sources of money) for a given time period, usually a month. It’s safer to overestimate your expenses than to underestimate them. Life is full of surprises and part of being a young adult is learning to be prepared. Imagine you estimate your food costs for a month, whether you will be using your college’s meal plan or will be cooking for yourself. At this point many students would forget to add in the cost of eating out with friends once in a while. Even grabbing a cheeseburger at a local fast food place once a week can throw off your whole budget. If your expenses are greater than the money you have available to pay them, you are going to have a serious problem. Plan out your costs in advance, and keep in mind costs you may not usually think about.
Health Insurance
Many colleges require students to have health insurance coverage. If a student does not have insurance, they are often automatically enrolled in an insurance plan provided by their college. When planning college finances, students and their parents often forget about the cost of insurance. However, there are ways for students to cut down on the cost of meeting the health insurance requirement of their school. Because of the 2010 health-care reform law, young adults are able to stay on their parents’ health insurance plans until the age of 26. This can sometimes be cheaper than taking out an entirely new policy.
If the student will be attending school out of state, parents will have to see if their policy covers that. Some insurance companies that do cover out of state students still charge higher deductibles and co-pays. Students and their parents will have to sit down and do the math to see which option is cheaper and still provides the necessary coverage. If the student will be on their parents’ plan, then the school should be notified that the student should not be enrolled in the school’s plan.
Car Insurance
Car insurance can be a significant portion of the cost of having a car on campus. Make sure that you need a car. No car means no insurance cost. If you do need a car then it is important to be aware of all the discounts your car insurance company offers to students and young adults. Many car insurance providers give discounts for completing defensive driving courses. Some insurance companies even have great discounts just for getting good grades. Check the website of your car insurance provider and learn how much you can save.
With these tips, you are well on your way toward being financially responsible. Most students have debt to pay off after graduating college. Don’t make the debt worse than it has to be. Being prepared with a little financial planning doesn’t have to be difficult. It is all about being aware of your costs and ways to reduce those costs.
Image by Ed Yourdon