Adviser: College Kids Need Budgets

Budgets are a foreign concept to many college students.

Not only have most never managed their own money, many are also away from home for the first time surrounded by new people and places. They're worried about classes, roommates and social events, not managing money.

"The vast majority of kids in college really have never worked with a budget," said Michael Kresh, Commack resident and financial planner.

When they get their loan leftovers after tuition is paid, a check that's supposed to cover rent, food and other living expenses for the entire semester, many think they've hit the jackpot.

"It's not uncommon to assume it's more money than it really is," Kresh said. "You get a false sense of security when you see that relatively large chunk of money sitting in the bank."

That's where budgeting  - and willpower - comes into play.

Kresh said students living off campus have it the hardest, because they need money for monthly rent, food and utilities. Those living on campus have the luxury of up-front room, board and meal-plan expenses so there are no living costs to account for.

"You have to pay more attention if you live off campus because if you don't pay, then you might not have a place to live," he added.

Many students take out extra money above tuition costs in their student loans and use it throughout the semester to pay monthly expenses.

Kresh said students have to avoid the pitfall of using that large check as extra spending cash.

"I would say there are more than a few people who get that check and haven't done the math," Kresh said. "They go out a bit more, do some more entertaining, hit the bars a little more than they should and before they know it, they don't have money for December rent."

Students in this situation should make a simple list of their monthly expenses, including rent, electric and cable bills and food costs, at the beginning of the semester, Kresh said. They then need to set aside enough money to pay each bill each month. Only money left over after those costs are covered should be used on entertainment.

It seems simple, but Kresh said many students have trouble holding tightly to their budgets with a large sum in their accounts. "Budgeting is something that is very, very important for college kids, particularly when loans are involved," he added.

Even those who live on campus, should have some form of budget for whatever money they've saved up or been given by their parents for the semester.

"You don't want to leave yourself in a situation where you have to make that embarrassing phone call for mom and dad to send money," he said, adding on-campus students should work with their parents to budget how much they'll spend each and what they'll need for travel expenses to and from school.

College students who work during the school year have the advantage of a constant flow of income, not just one lump sum at the beginning of the semester. But Kresh said they, too, need to make a simple budget documenting what they make and what they spend, and allocate their money accordingly.

"You're going to have enough stresses in college," Kresh said. "You don't want one of those to be figuring out where you're going to scrape up money."