says you have to be broke in college?
College Students! You might be surprised to find that you aren't poor
at all. You just need to figure out how you spend your money. Once you
track it, you can manage it. With a little effort, living on Ramen
noodles will be history.
To find out where the money goes, we
conducted an informal survey of 100 college students at campuses across
the nation. We asked: What do you spend money on regularly that's not a
necessity? (That ruled out spending on the essentials such as tuition,
books and housing.)
The answers were pretty
consistent -- buying liquid refreshment and fast food topped the lists.
| 1. Alcohol
|2. Fast food
||2. Fast food
|3. Cell phone
||3. Cell phone
|4. Movies (first-run tickets
||4. Movies (first-run tickets
|5. Car things
|7. Music (CDs, MP3s)
|8. Video games
|9. Electronics/computer stuff
||9. Shower gel, perfume, lotion
|10. Tobacco products
||10. Hair products
Survey says ...
Buying alcohol tops the list for
both genders and some students were very specific on what kind of
alcohol they buy. Kirk Madsen, a student at Central Michigan University
in Mount Pleasant, Mich., explained he spends his money on "music and
beer, not alcohol."
Fast food is another item on the list
that should not surprise anyone who has been on a college campus for
more than five minutes. In addition to the common area food court in
most universities, there are always a number of fast food and delivery
places a stone's throw from the campus.
As cell phones have become the
standard rather than exception, so have the way most students use them.
Many find their bills are much higher than expected because all of
their daytime minutes are used up in the first week or so.
Movies are expensive and becoming
even more so. The average of $7.25 for the movie and $3 for popcorn
even at a student discount adds up! A movie date might not be such a
cheap date after all.
The cost of campus parking tickets
didn't make the Top 10 lists, but were mentioned by a number of
students as a big expense. Tickets ranged anywhere from $10 to $50
depending on whether it's a first ticket or a repeat and the
availability of campus parking.
Vive la difference
The split in what men and women
spend their money on exemplifies the distinct differences between the
two sexes. In our survey, women preferred to spend money on themselves
with new clothes, or new eyeliner. Men, on the other hand, opted to buy
things to play with -- cars or car accessories, video games and
"As a self proclaimed nerd,
I've also been known to splurge on the obligatory computer part, not
too much though. I am kind of a tight wad in a relative sense, but I
prefer the term fiscally responsible," said Harvard student, Drew
Becoming fiscally responsible
like Heckathorn is not difficult, explains Sharon Rich, founder of
Womoney, a fee-only financial planning firm in Belmont, Mass.
Stretch your disposable
The first step to becoming more
responsible is to know where your money is going. Spend about two weeks
tracking all your purchases. Get a little notebook and try to write
everything down. "Write checks when you're spending money, that slows
you down," suggests Rich.
After collecting the numbers, enter
them into a software program like Quicken. There you can categorize
where the money is going.
If you do not have access to software
there are other ways to organize what you have collected. You can use a
basic spreadsheet or simply just write everything down, add it up and
categorize it yourself. Though, Rich hastens to add, "Quicken is the
absolute best way to really track money."
Once you have everything categorized
and on paper in front of you, look at it carefully. Rich suggests you
ask yourself, "Is that where I want to spend my money. Is that what I
have prioritized or think is important?"
Should you answer no to any of those
questions, then it's time to re-evaluate. This step may seem daunting,
but can really be as easy as putting money into an envelope.
Let's say you track your spending
habits for two weeks and you find yourself spending $50 a week eating
out. Rich advises creating cash envelopes for certain areas of
spending. Continuing with the eating out example, she suggests putting
$30 in a cash envelope. That is the amount that you can spend that week
on food. You'll need to be strict with yourself and when it is gone,
it's gone until next week.
There are no basic guidelines for
spending. Just because your roommate can afford to go to the mall every
day and come back with a new outfit or CD doesn't mean you can.
And, there is no right or wrong
amount of money to spend. It's what you can afford. Rich suggests
thinking about your cash source. Are you living on your financial aid
or are you working? Do you have a set amount of income each month?
Figure out your limit.
While you might be tempted to buy
something on credit and pay for it later -- don't do it. Credit cards
should be seen as a responsibility. They should be paid off every
Rich emphasizes, "Credit cards are
not a place to borrow money from unless there is a real emergency. A
broken car is not really an emergency because you can expect that to
Make a spending syllabus
Organize a budget for yourself. It
should reflect your responsibilities and leave some room to enjoy your
time in college. Everything in moderation, of course.
Set up an emergency account. "Assume
that there is going to be one big disaster whether your car breaks down
or a family crisis crops up," Rich advises. Wouldn't it be nice to know
that a potential $500 car repair bill is already taken care of?
She suggests putting the money
aside in a separate account. If you can't do it all at once, budget a
certain amount each month for the emergency account.
Keeping up the cards
If paying off your credit card
balance monthly is out of the question, Rich has a few tips that can
Use your cards thinking that you will
pay off your balance at the end of the month. Enter each charge you
make into your checkbook register, the same as you would for a check or
a debit card transaction. That way you can use your checkbook to track
each item expense-by-expense rather than just at the end of the month.
Keep in mind that when you charge on
your card, the money is spent. It is not spent when the bill comes --
that is when the money has to be in your account.
If you use a credit card wisely, it
is not a bad thing. It's carrying the debt that can get you into
trouble. The interest adds up quickly.
Whatever you do, Rich says to keep it
simple. Figure out the best way for you to track your money without
making it an elaborate thing. That way you will really do it.
Decorate those envelopes, color code
your checkbook or just try to change how you think about money.
Once you've got your cash flow
figured out, those top 10 things might not be as money consuming as
they once were.