By Josie Wall
The average student graduates with over $30,000 of debt as of As of April 2017, according to USA Today. The prospect of such a bill after graduation can deter many from even beginning the process of higher education, but there are ways to plan ahead and stay out of the hole.
Matt Goren, an adjunct assistant professor specializing in financial planning, housing and consumer economics in the University of Georgia’s College of Family and Consumer Sciences offered several tips for incoming, current and recently graduated students to prepare and stay on budget.
Incoming College Students
As students prepare to move from high school to college, they should begin understanding their relationship with money and begin the habit of saving. High school students may not have to deal with large expenses such as housing, but they do have to manage spending on gas, entertainment and other small ticket items. “Get into this habit of saving greater than 50 percent of your money, even if they don’t need to,” Goren said. “I don’t know that high schoolers need to be saving, but if they get into that habit, it’s going to set them up pretty well for the rest of their lives.”
One important thing to remember during this time is communication between the student and parents. Sebastian Rodriguez, a sophomore at the University of Georgia, wishes those communication lines had been clearer prior to college.
“I just never took enough time to look at what everything around me truly costs before I got into college. It was a little overwhelming at first, and then trying to work out a system with my parents once I got here just wasn’t what I was expecting,” Sebastian recalled. “I definitely should have been saving, planning for these big initial expenses that come with moving into your college dorm or apartment.”
Goren stressed the importance of parents being honest with their kids about their expenses. He encourages parents to lay out their own spending and budgeting habits to pass on to their kids and to be truthful about what is working and what is not
Current College Students
As students enter college, they are usually met with bigger expenses to add into their budget. The main consideration a student needs to make would be considering how to minimize the amount of student loans. Finishing college without a mountain of loans is considered a success story today. A common misconception is that students should look for the smaller ways to control their budgets. Avoid expensive coffee habits or make shopping lists to control impulse purchases are common advice. Goren explained that the best way to slim your expenses is to reduce major spending. For example, cheaper housing options are a great way to save on your biggest expense every month.
Another great way to help with the cost of schooling is through scholarships and aid. Goren advised to students to actively apply for scholarships and grants, and to fill out all of the necessary financial aid forms. Goren said the department of education released a report that last year showing there was $2.3 billion in unclaimed grants.
Getting a job while in school can be helpful to generate extra income, but Goren suggested this makes only if it can contribute to your field of study. Goren explained, “I actually don’t recommend that people go get the minimum wage jobs. I think some college students get into a panic and think, ‘I just need some money. Any money.’ And so they’ll go and work for these minimum wage jobs where they’re really working, like legitimately work the whole time. They’re barely making any money, and they’re working rather than studying. And then they’re not going to put this on their resume because who cares that your worked at Pita Pit. So I generally say just don’t even bother. I’d rather, honestly, a student go out and take a student loan. If they’ve exhausted scholarships (which I don’t think they have), the off-campus jobs that work for their career (which I don’t think they have), the work-study jobs. If there’s no other angle, I’d say go take a student loan before you take one of those minimum-wage jobs.”
After graduation there are certainly big changes to a new graduate’s budget. Goren warned of the dangers of “lifestyle creep,” which he described as feeling the need to immediately upgrade your lifestyle. The best way to combat the desire for the big apartment, new car, new wardrobe, etc., is to save and begin to build assets for future spending on a house and retirement.
Aidan Rogers, a spring 2017 graduate of the University of Georgia, said he has felt the pressures “lifestyle creep.” A few months after starting his full time position as a financial auditor at WestRock in Atlanta, Rogers was tempted by the more extravagant things his bank account would allow. “I think everyone wants to pretend that they’ve just got it all right after graduation. The dream apartment, car, the whole package. But it’s important to be smart about your spending and plan for the future life you really want,” explained Rogers.