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One of the most important lessons you can learn at college is how to manage your budget

Sep 08 '00 Write an essay on this topic.

I remember exactly how it happened – it was my first week of my freshman year of college at the University of Denver. I was but a mere 18 years old.

My parents didn’t want me working while I was in college. In high school, they said it was necessary to learn responsibility and the value of a dollar. They encouraged me to take an after-school job. I earned a nice, small nest egg that I was saving for the future – or so I thought.

It was in the very middle of the Driscoll Bridge over Evans Avenue. Every on-campus organization had a booth in the bridge and in the Driscoll Center to recruit new members, to make their services more alluring, or to simply inform others about their existence.

And there, right in the middle of the bridge, was Citibank, offering Visa and MasterCard credit cards to whoever wanted to apply. They even gave me a free T-shirt as an incentive to apply.

There I was, 18 years old, and an “adult” out in the real world for the first time in my life. Yeah, right.

I remember being rather skeptical, thinking there was no way in the world they were going to give an 18 year old boy a credit card, or if they would, it would have like a $100 limit – not even enough to buy my course books for that semester. I was wrong.

They started me off with a $1500 limit. I used my card, mostly to show off (like the store clerk cared if I had a credit card or not). I paid my bills at the end of the month, and they slowly increased my credit limit.

Well, then the problem came. I can remember wanting to go with my friends to the mountains and go skiing. I can remember wanting to go on a weekend getaway with my friends. I can remember wanting some of the same things my friends had. I didn’t have the money for it then but I did have my credit card.

Away I went, charging up a storm. It was amazing how soon I hit the peak of that credit limit.

Citibank seemed thrilled that I made the Minimum Payment Due. As a reward, they increased my limit some more. I charged more, now it was a habit.

When I transferred to Wisconsin, MBNA America and American Express offered me credit cards. I jumped at the chance to have more access to money, and ran the MBNA card to the hilt, but always paid off the American Express Card.

But then, American Express got smart. In my senior year of college, they guaranteed my acceptance to their Optima Card – a credit-card version of the American Express Card that would allow me to carry a monthly balance.

When I graduated, I knew I was in serious trouble. I didn’t believe in bankruptcy, because I made those charges, and I bought stuff I simply couldn’t afford. I was roughly $20,000 in debt, at an average interest rate of 19%.

I was 29 when I finally paid off that debt. I never missed a payment, and most of those years I could only afford to pay the Minimum Amount Due.

Why did I just tell you this story? What’s that have to do with the topic at hand?

Actually this story has everything to do with the topic at hand, which is Managing Your Budget. I’ve told you this story because I think my own situation was very relevant to the subject at hand.

Now, the better question is how do you avoid the same situation?

First and foremost, you must actually make a budget. It’s one thing to show up to college, get your tuition, room and board paid, and then say to yourself, I have $3000 set aside for my freshman year for spending money. It’s another thing altogether to figure out how far you can stretch that $3000.

You must be realistic about your budgeting. Do not be afraid to ask your parents for help. Since they pay monthly bills that you’re probably not aware of, they can be an invaluable source of information. You’ll want to ask yourself a few poignant questions.

How much will books cost, per semester? Don’t rely on the overall average student cost, rely on the average student cost in the subjects you are interested in, and may wind up majoring in. An English major is going to spend more money on books than will a Journalism major. A Science major will spend more than an English major will. You can probably find out what the average cost is from the information office at your college or university. Also, don’t count on being able to purchase used books at the campus bookstore or any other source. Lord knows I’ve run into enough classes where the books are brand new, and it’s the first time that those books have been used in the class. What’s worse is when the class isn’t taught next semester, so that the campus bookstore won’t buy the expensive textbook back.

Also, count on the copy center just off-campus to be a major source of your textbook charge. Many professors supplement their income by making their students purchase books they’ve put together or written at the local Kinko’s.

How much will you be spending on food, per semester? Keep in mind that while a majority of your meals are probably included in your room and board fees, you’re going to eat pizza just like every other college student. Be realistic, you’re not going to order a pizza once a month. More likely than not it will be once a week.

How much will you be spending on concerts, per semester? Concert tickets aren’t cheap, and with all your friends going to see the band d’jour, you’re going to feel awfully left out if you aren’t going as well.

What about other forms of entertainment? You’re going to see movies – in the theater. While you do get student discounts at many nearby theaters, you’re still going to pay between $4 and $5.50 a show. How often do you see movies now? Most likely, you’re going to see them with the same frequency once you’re at college – if not more. How much will you be paying for that new CD of the band d’jour that you saw in concert? Even used CDs aren’t cheap. What about skiing? What about Spring Break?

How much will you be paying for long-distance service or Internet access per month? Not all schools offer free Internet access, and you still have those monthly telephone charges to contend with. Phone bills, just counting basic, local service, can be quite expensive. I know that when I was at the University of Wisconsin, we paid nine cents for every local call made. Those charges really do add up.

You’re going to be buying sweatshirts, T-shirts, jeans and other clothing while you’re in college. How much, realistically, will you be spending on those items?

Unless you like living in a prison cell, you’re going to have to decorate your dorm room. Break out your wallet for that!

There are a host of other costs that will be associated with your college stay.

The main idea is, make a budget and stick to it. If you simply can’t afford to do something, swallow your pride and tell your friends you just can’t swing that activity, and then find some way to stretch your savings.

What can be done to stretch money without getting a job?

Well, there’s the oldest game on the books, and that’s selling blood. I have always had a queasy stomach, and that was never an option with me. However, I had a lot of friends in college who was on a first-name basis with the staff at the blood bank.

You can copy your CDs to tape, or burn your CD to another, and then sell the original CD to a used music store.

You can find a used bookstore somewhere off-campus, and see if they’d be interested in some of your older books that you’re not using that the school bookstore wouldn’t buy back. While you may only get twenty cents on the dollar, it can still add up to a lot of money.

You can shop around and buy used books instead of new ones. You can talk to some students, making sure that the photocopied books are used year after year by the same professor, and buy an old copy from a student who has just finished that professor’s class.

You can put your own skills to good use. When I was in college, I was an English major. Not only did I have better command of the language than many of my fellow students, I was also a quick typist. Around term-paper time, I would get my own papers done as soon as possible, because word got around and pretty soon I was flooded with requests to type other people’s papers. Because of my grammatical and spelling skills, I would also edit the mistakes made by the author. In these kinds of pinch-times, I was making $3-5 a page, and some of these term papers were 15 and 20 pages! My cost was minimal: just my time, the cost of paper, and the cost of printing ribbon.

I had another friend at the University of Denver who worked in a ski repair shop while in high school. Since skiing was such a major activity at that school, he set up his own ski repair shop in his dorm room, charging $10 to wax a pair of skis. As someone who waxes my own skis, I would imagine that his cost was somewhere around $0.25 to wax a pair of skis. That’s a tidy profit, and it shows that you simply have to be creative.

Balance your checking account, and do not get in the habit of using an ATM. Go up to the teller and write yourself a check. Even if you have to pay a small charge per check, it is probably far less money than whatever the ATM fee is. Plus, with a check, it is easier to keep track of your money than it is by pulling money out of a machine.

Resist the temptations for that credit card. In more cases than not, you are just not mature enough at 18 to have one. That’s exactly what the banks are counting on. If you do have a credit card, don’t use it unless you have a real, true emergency. Running out of pretzels does not qualify as a real, true emergency.

Finally, avoid the illegal activities. While you may think it’s cool to pick up smoking, that’s probably one of the most expensive and wasteful habits in the world. You’ll definitely break your budget if you take it up. Illicit drugs are also expensive, and will do nothing to enhance your studies, despite what your friends may say. You may also find that beer costs a lot more if you’re underage by the time you factor in an older friend’s cut or you’ve bribed the clerk at the grocery store.

I wish I abided by these own rules when I was a college kid. Right now, at 32, I’m debt-free (except for my mortgage). However, I’d probably have a lot more money in the bank than I do now because I threw out so much of it on credit card interest, buying things I couldn’t afford at the time.

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