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Budgeting for College Students: Where to Start

College marks a significant transition period for many young adults — it’s a time of newfound freedom and the financial responsibilities that come with it.

Whether your funds come from family, student loans, scholarships or your own wallet, you’ll need to budget for expenses like textbooks, housing and, yes, a social life. Knowing who’s footing the bill, what costs to expect and which ones you can live without — ideally before school starts — can reduce stress and help you form healthy financial habits for the future.

Have the money talk

Before you build a budget, go over some important details with the people — parents, guardians or a partner — who will be involved in financing your education. Discussing your situation together will ensure everyone is in the loop and understands expectations.

“One of the biggest obstacles we have [with] teaching young people financial literacy and financial skills is not making money and expenses a taboo subject,” says Catie Hogan, founder of Hogan Financial Planning LLC. “Open lines of communication are far and away the most important tool, just so everyone’s on the same page as far as what things are going to cost and how everybody can keep some money in their pocket.”

Here are some topics to start with:

  • Who is paying for college and how. Have a conversation before the start of each school year to decide if your family will pay for costs out-of-pocket or if you’ll need to get a job, rely on financial aid, use funds from a 529 plan or combine these options.
  • What expenses to expect. In addition to tuition, you’ll have to budget for other college costs, like transportation and school supplies. Make a list of likely expenses, estimate the cost and agree who pays for what. (See more on expenses below.)
  • FAFSA and taxes. Whether a parent or guardian claims you as a dependent or you file taxes on your own determines whose information is required to fill out the Free Application for Federal Student Aid, or FAFSA, and who can claim tax credits and deductions. Discuss your financial status before each school year and address any changes, like a raise or job loss.
  • Credit cards and bank accounts. If you’re considering opening a credit card account for the first time, are younger than 21 and don’t work full time, you’ll need a co-signer: a parent or other adult. You’ll want to talk about ground rules, like only using a credit card for emergencies and defining what constitutes an emergency. Approach new financial products with caution and be careful not to take on debt. If you plan to directly deposit funds from a job or allowance, look for a checking account that offers low (or no) fees.
Anticipate your expenses

To determine what you’ll spend each term, keep these college-related expenses on your radar:

  • Textbooks and school supplies. Course materials could eat up a large chunk of your budget. The average estimated cost of books and supplies for in-state students living on campus at public four-year institutions in 2016-2017 was $1,250, according to the College Board. Also plan for purchases like notebooks, a laptop, a printer and a backpack, and read the do’s and don’ts of back-to-school shopping for money-saving tips.
  • Room and board. When it comes to food and living arrangements, weigh your options. Compare the cost of living on campus and getting a meal plan versus renting an apartment and shopping for groceries.
  • Transportation. Will you take a bus, bike or walk to and from campus or work? If you absolutely need a car, be prepared to cover gas, maintenance and insurance.
  • Clothing. Budget for seasonal clothing and job-fair outfits.
  • Discretionary spending. You deserve a break from studying. Leave room in your budget for fun stuff like entertainment, travel and social activities.

» MORE: How to manage money in your 20s

Track your spending and cut back where you can

The basic principles of budgeting, like living below your means, still apply regardless of the source of your funds. Whether you’re working or receiving help from your parents or financial aid — or all of the above —  figure out how much money flows in and out.

You don’t have to go through a grueling process, like filling out a spreadsheet every day; you’ll have enough homework. Just set aside some time at least once a month to review your money situation. Budgeting apps and online banking can help make the process more manageable.

“Just knowing that you can log into your online banking and take inventory of what you have and the income coming in, I think that’s more than enough,” Hogan says.

Once you start to monitor spending, you can decide where to save money. Identify your needs and wants and reduce spending on things that aren’t essential.

Start with the common culprits: food and fun. “Looking at what is the least expensive meal plan you can get without going hungry is a big money-saving tip,” Hogan says. “And a lot of campus activities and groups and all that [are] really great, but they can weigh really heavy on your budget, so don’t overcommit.”

» MORE: Should you spend, save or invest your graduation gift?

Keep your future self in mind

If you’ve managed to stay afloat as a student, you’re in good shape. Continue on a financially healthy path by thinking about life after graduation. If you’re working and able to build a cushion, set financial goals, like creating an emergency fund or saving for a trip — and don’t forget about any student loans you might have to pay off after graduation.

“You obviously don’t want to burden yourself so much that you have anxiety about it while you’re in college, but I think having a healthy grasp of reality … is helpful in terms of knowing what kind of lifestyle you can really afford to live in college,”  says Kyle Moore, a certified financial planner in St. Paul, Minnesota.

Lauren Schwahn is a staff writer at NerdWallet, a personal finance website. Email: lschwahn@nerdwallet.com. Twitter: @lauren_schwahn.

What to Do When the GI Bill Won’t Cover College

Under the Post-9/11 GI Bill, veterans who serve at least 36 months of active duty are eligible for coverage of up to 36 months of college or career training.

That’s enough for nine months of education each year for four years. Benefits also include a monthly housing allowance and $1,000 stipend for books and supplies. The 36 months of college or career training need not be consecutive and can be used over a 15-year period.

Some vets can pay for an undergraduate education with the bill alone, but others need additional resources.

That’s because not everyone can complete an undergraduate degree in four years. The National Center for Education Statistics found that just 40% of college students who receive a bachelor’s degree do so within four years. And veterans don’t always know how to maximize GI Bill benefits, experts say.

“It’s pretty rare when I have a savvy veteran who knows how to use their GI Bill to its extent. There are always questions and concerns,” says David Boyle, veterans program manager of Champlain College in Burlington, Vermont.

When the GI Bill might not cover your costs

Here are a few situations in which you’d likely need to supplement the GI Bill:

Attending a private college

Post-9/11 GI Bill benefits cover the full cost of in-state tuition at public colleges, but only up to $22,805.34 per year at a private college.

What to do: Use the GI Bill Comparison Tool to see how far your benefits will go at different schools before picking one. If your college is eligible, the Department of Veterans Affairs’ Yellow Ribbon Program can provide additional funds.

SERVING LESS THAN 36 MONTHS

Those who serve less than 36 months receive a percentage of the maximum benefit. For example, if you served at least 18 months, but less than 24 months of active duty, you’ll qualify for 70% of Post-9/11 GI Bill benefits.   

What to do: Find the benefit percentage you’ll receive through the VA. This will help you determine how much of your tuition and housing costs will be covered and how large a gap you’ll need to fill.

TRANSFERRING COLLEGES AND LOSING CREDITS

More than one-third of students transfer colleges, according to the National Student Clearinghouse Research Center. And when transferring, students lose an average of 13 credits, according to the National Center for Education Statistics. If you lose credits by transferring, you might require more than 36 total months to finish a degree.

What to do: Use a transfer credit tool, available at most colleges, before making the switch. This will show you how many courses you’ve already taken might be accepted at a new school.  

Transferring benefits to a SPouse or child

If you transferred benefits to your spouse or dependent children while on active duty, you’ll only be able to use GI Bill benefits by revoking the transfer. 

What to do: Use the Transfer of Education Benefits website to revoke a transfer. If you don’t revoke the transfer, pay for college using grants and scholarships, work-study and student loans.

needing additional time

If your intended career field requires more than 36 months of education or an advanced degree, GI Bill benefits won’t cover all of your costs.

What to do: Calculate the costs of college for your degree or an advanced degree at different types of schools. Public colleges will have the cheapest tuition, but a private college that offers you more financial aid could be a better value.

college closing

If your school closes or is no longer approved by the VA, your benefits won’t be reset.

What to do: To continue your education and use any remaining GI Bill benefits, you’ll need to transfer.

Closing coverage gaps

First, make sure your school has submitted your enrollment status to the VA so you can receive your full benefits. Then, if you have coverage gaps, fill out the Free Application for Federal Student Aid, also known as the FAFSA.

The federal government, states and colleges use the FAFSA to award grants, scholarships, work-study and student loans. Your GI benefits won’t affect your expected family contribution, so you can still receive aid, such as the federal Pell Grant. Veteran-specific scholarships and grant programs at the state and school level might require additional applications.

Experts advise student veterans to explore all potential programs and services created to help them pay for college. When Jude Prather, veteran services officer for Hays County, Texas, left the military in 2005, he was unaware of the Hazlewood Exemption Act, which provides eligible veterans up to 150 hours of tuition exemption, including fees, at public colleges in Texas. Instead, Prather paid tuition for his first semester out of pocket.

“That’s the case for a lot of veterans: In their hurry to get out of the service, they may miss some opportunities or benefits that are available to them that they’re just unaware of,” says Prather.  

Several states — including Connecticut, Illinois, Massachusetts, Montana, South Dakota, Washington and Wisconsin — offer tuition exemption or benefit programs for veterans. Ask your state’s VA for details.

» MORE: 10 top scholarships for veterans

Consider a student loan if the GI Bill, grants and scholarships don’t cover all of your college costs. Maximize federal loans before choosing a private lender, because private loans tend to carry higher interest rates than federal loans. Private loans also have fewer protections and forgiveness options. However, depending on your credit — or your co-signer’s credit — you might receive a lower rate on a private loan than a federal one. Compare private loan options before making a decision.

No matter the scenario, Boyle recommends speaking with a VA counselor about your education options and the best way to maximize your GI Bill benefits.

Anna Helhoski is a staff writer at NerdWallet, a personal finance website. Email: anna@nerdwallet.com. Twitter: @AnnaHelhoski

What to Buy (and Skip) in June

June is a time for dads, grads and newlyweds. But what else is the month known for? Deals.

From scooping up swimwear to saving money on gym sessions, here’s what you should buy — and a few things to hold off on — in June.

Buy: Swimwear and lingerie

The first things to put on your “to buy” list are swimwear and lingerie. Why? In January and June, Victoria’s Secret hosts an insanely popular semi-annual sale, and other retailers follow suit. This is the time to save big on bras, panties, swimsuits and the like.

Last June, Victoria’s Secret customers snapped up savings across popular intimates categories. Discounts included: Up to 50% off lingerie, up to 40% off loungewear, a $19.99 or less bra clearance and a $4.99 or less panty clearance.

Victoria’s Secret recently phased out its swimwear collection, but its Pink brand still sells swim styles.

» MORE: Victoria’s Secret semi-annual sale guide

Skip: Grills

June marks the official start of summer, which means almost everyone has grilling on their mind. This higher demand equates to higher prices. If you can get by without hosting a barbecue in June, wait for prices to cool off later in the summer. As with most other timely purchases, the further into the season you go, the more you’ll save.

Buy: Gym memberships

While everyone else is grilling outside this month, you can head into the gym at a bargain price. Summer is one of the best times to purchase a gym membership because, as you probably guessed, demand isn’t as high.

You don’t have to settle for the advertised membership fee. Consumer Reports recommends negotiating the price. For instance, ask the gym to give you a free trial month or waive the initiation fee. The fitness center may be more willing to work with you if it’s behind on new customer sign-ups.

» MORE: What to buy every month of the year in 2017

Skip: Brand-name clothing

If you’re a fan of designer clothes, shoes and purses, you’ll want to wait another month before overhauling your wardrobe.

Designer clothing sales will be great in July, in large part due to the Nordstrom Anniversary Sale. During this high-end department store’s once-a-year sale, shoppers can save hundreds of dollars on top brands. In the past, the store has discounted items from labels such as Tory Burch and Marc Jacobs. This year’s sale begins July 21.

Buy: Movie tickets

If you’re looking to go to the movies for less, June is a perfect time. Each summer, movie theaters offer programs that let kids beat the heat and see children’s movies at discounted prices.

Check with your local theater to see if it will offer such a program. We’ve already spotted the Cinemark Summer Movie Clubhouse, where participating locations will sell a $5 punchcard pass for 10 movies while supplies last, or $1 per person, per movie at the box office. Harkins Theatres, too, has a Summer Movie Fun offering for kids with 10 movies over 10 weeks for less than $1 per movie.

Bonus: Father’s Day sales

Father’s Day is June 18 this year, and if you need just the right present to show dad how much you appreciate him, retailers will be there to help you out.

In the past, we’ve spotted Father’s Day deals at places such as Sears, Harbor Freight Tools and Dick’s Sporting Goods. Many of these Dad-oriented sales will happen in the days leading up to the holiday, so in this case it can pay to procrastinate.

Bonus: Freebies

Father’s Day and the first day of summer always June highlights, but there are some lesser-known occasions that happen during the month as well. Mark your calendar for the following days, which could offer discounts or freebies: National Doughnut Day on June 2, and National Sunglasses Day on June 27.

More: Hear what to buy (and skip) in June

In an interview with WDUN radio station in Gainesville, Georgia, NerdWallet discussed the products consumers can save money on during June.

Courtney Jespersen is a staff writer at NerdWallet, a personal finance website. Email: courtney@nerdwallet.com. Twitter: @courtneynerd.

Updated May 22, 2017.

6 Smart Ways to Travel Cheaply

Memorable vacations can come with a price tag you’d rather forget. But with proper planning, smart research and a flexible attitude, you can travel cheaply and still have an experience worth remembering. Here’s how.

1. Cut transportation costs

Before planning your trip, have a rough budget in mind. A vacation calculator can help. If you know how much you’re willing to spend on airfare, this map can give you ideas for destinations that are within your budget.

Traveling cheaply isn’t just about cutting costs — it’s also about getting the most out of what you spend. You may discover, for example, that the $400 you thought could pay only for a flight within the U.S. can actually take you to Paris and back.

If your travel dates are flexible, you may find an even bigger selection of places you can afford to visit. If you’ve already picked a destination, changing the departure dates could lower your airfare.

Setting up alerts for when prices drop should also be a part of your strategy. Try apps such as Yapta or Hopper, which will send you price notifications on flights you’re tracking. (Booking fees may apply.) You can also follow Twitter handles like @theflightdeal or @FareDealAlert for limited-time deals. If you find a price you like, scrutinize the airline’s baggage policy before booking. Some offer cheaper ticket prices, but have strict carry-on requirements or tack on sizable fees for overweight and oversized luggage.

If your destination is within driving distance, consider hopping in a car instead of on a plane. Use a trip calculator, like this one, to make sure it’s worth the tradeoff. Add in the cost of renting a car, if necessary.

2. Compare lodging options

Finding a cheap hotel room can be tricky and takes a bit of effort. Start by shopping around on sites like Expedia, Priceline.com and Kayak to find hotels in the area, and then search for hotel promotion codes online. Contact hotels directly to negotiate a lower price. Also consider staying in a hotel outside the center of the city and looking for last-minute deals.

If you’re open to alternatives, skip the hotel and book a room through a site like Airbnb, Homeaway and OneFineStay. Not only could those be more affordable, but often you’ll stay with a local resident who can point you to cheap restaurants and activities that aren’t in travel guides. Hostels can also be a money-saver if you’re OK with bare-bones accommodations and potentially sharing a room. Keep in mind that they may have age restrictions.

3. Eat wisely (and not just healthy)

Many travelers underestimate the costs of meals, snacks and tips, says guidebook author James Kaiser. He advises bringing your own food or buying it at a store when you arrive at your destination to save money.

That doesn’t mean you have to skip restaurants altogether and haul groceries around. Dining out is one of the most enjoyable parts of travel. The trick is knowing when to indulge and when to save.

Start by looking at your itinerary. Break down your meals each day and identify the times you want to splurge. Then look for ways to save money on the other meals. For example, you can avoid inflated prices at the airport by bringing food and an empty water bottle that you can fill once you’re past security (passengers are prohibited from bringing more than 3.4 ounces of liquids, per container, in carry-on bags at U.S. airports). For breakfast, pack energy bars so you can save time and money in the mornings.

Your spending will likely fluctuate from day to day, so remember to adjust your budget to avoid overspending.

4. Research your currency options

If you’re traveling abroad, find out if the country you’re visiting is plastic-friendly. If so, a debit or credit card that doesn’t charge foreign transaction fees could be your best bet. Otherwise, research your currency exchange options to avoid the poor rates and numerous fees common at airport kiosks. Those will shrink your vacation fund before you’ve even had the chance to unpack.

Visiting your bank or credit union to exchange money before you leave may be the best option. Assuming it has that currency, you’ll likely get better exchange rates and lower fees. And, just in case you end up needing more cash once you’re abroad, ask if your financial institution has international branches or a partnership with a bank overseas. If so, you may be able to withdraw cash from those ATMs with low or no fees.

5. Get a prepaid phone or SIM card

A cell phone can be useful for navigating new cities, as well as staying connected to travel companions and life back home. But for international travelers, it may also come with data roaming fees. You’d save the most money by ditching the phone during your trip, but that may not be realistic. Your best option will likely be buying a prepaid phone once you arrive or having your carrier unlock your phone, if possible, so you can use a foreign SIM card when you land.

6. Keep souvenir spending in check

Like everything else, set a budget for souvenirs. Also consider doing some research on the best souvenirs and shops, so you’ll have a sense of what you might buy and the prices to expect.

If you find yourself on the verge of an impulse purchase, try an abbreviated version of the 72-hour shopping rule, in which you put off buying something for three days to see if you still want it. That amount of time is probably impractical when you’re on vacation, but if your schedule allows you to return to the store the next day or even later that same day, you may find that you can easily live without that $150 wool sweater from Iceland. You were only going to wear it once, anyway.

Devon Delfino is a staff writer at NerdWallet, a personal finance website. Email: ddelfino@nerdwallet.com. Twitter: @devondelfino.

Reached Your Savings Goals? Here’s What to Do Next

You created an emergency fund, and built it up so it covers three months of living expenses. You paid off your high-interest debt. You funnel 15% of your income to retirement. That’s good work. But, um — now what? Push yourself beyond basic savings goals by taking on these steps. Check your budget If you used a...

What to Do When You’re Upside-Down on a Car Loan

When you owe more than your vehicle is worth, you are upside-down, or underwater, on your car loan. This doesn’t immediately spell trouble, but it can result in less financial flexibility and security. You face two major risks: If you get into an accident, your insurance will generally cover the damage only up to the value...

Mortgage Rates Friday, May 19: Still Near 6-Month Lows

Mortgage rates for 30-year and 15-year fixed home loans, as well as 5/1 ARM rates, moved a notch higher today, according to a NerdWallet survey of mortgage interest rates published by national lenders Friday morning. Fixed mortgages rates are wobbling near six-month lows, according to the NerdWallet Mortgage Rate Index. Wall Street has a short memory. Worries...

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