BYOB Build Your Own Budget

BudgetingWhat is a budget?

◦Make the most of your financial resources

◦Determine monthly allowance◦Plan how to spend limited funds

Why create a spending plan?◦Reduce unnecessary expenditures◦Unsubsidized loans accrue interest

Who can benefit?◦Everyone

Creating a Realistic Budget

Three easy steps….1. List the income you expect

and when you expect to receive it

2. Write down your expenses – keep a list as they occur

3. Add up the two columns and find a balance

Cost of Attendance – 10 monthsFixed College Expenses

◦Tuition◦Health Insurance◦USMLE Step exams◦Books/Supplies (year)

M1 = $2400 M2 = $1,020 M3 = $930 M4 = $560

Cost of Attendance – 10 monthsVariable College Expenses

◦Living expenses - $11,790 or $1,179/m

◦Transportation - $2,412 or $241/m◦Personal stuff - $3,188 or $318/m

◦Total = $17,390 or $1,739/m

Spending Guidelines

Housing40%

Transportation12%

Food20%

Health care12%

Misc16%

Source: U.S. Bureau of Labor and Statistics

Budgeting the Cost of AttendanceGuideline % Per

GuidelineStudent A Student B

Housing – 40% $695 $650 $550

Food – 20% $348 $308 $300

Transport – 12%

$208 $208 $256

Health Care – 12%

$208 $208 $208

Misc – 16% $280 $275 $245

Monthly Budget

$1,739 $1,649 $1,559

*Tuition/Fees, Books/Supplies, USMLE have their own budget.

COA = $17,390/ 10 months = $1,739 per month

What is $3 a day worth?Daily Cost $3.00Monthly Cost $90.00Months in Year 12Total Yearly Amount $1,080.00Total borrowed after 4 years $4,320.00Annual Interest Rate 6.8%Interest after one year on first loan $266.00Interest after four years on all four loans*

$630.00

Interest during grace period* $147.00Total owed at repayment $5,097.00

Monthly loan payment $58.66Total payments $7,040Total interest* $2,717*4 yrs school, 6 month grace, 10 year repayment

Financial Aid AdjustmentsReturn excess funds each

semester◦You have 120 days from

disbursement to return any portion of your loan without penalty (it’s in your promissory note)

Borrow less and ask for more later◦Ask for budget adjustments for car

repairs, medical expenses, daycare, computer purchases, etc.

Budget PitfallsBeware of variable expenses

like…◦Parking◦Eating out◦Gifts◦Cell phone◦Class Dues◦Dry cleaning/Laundry◦Expenses paid yearly◦“Miscellaneous”

“Personal finance is 20% head knowledge and 80% behavior.”

-Dave Ramseyauthor of “The Total Money Makeover”

Save on GroceriesBecome a strategic shopper

◦Never go shopping hungry!◦Stick to your list◦Stock up on items when they are on sale◦Start a price book so you know when those

items typically go on sale◦Use coupons when items are already on sale◦Know who will double or triple your coupons◦Know where to find coupons

www.couponmom.com

Save on Housing – House vs. AptHouse Costs

◦Electricity and gas +$75◦Water, trash, sewer +$65◦Yard maintenance +$25

Time Costs◦Yard maintenance 4 hours◦House cleaning4 hours

Total possible monthly savings: $165Total time savings: 8 hours

Save on TransportationRaise insurance deductible to $1,000Consider dropping comprehensive or

collisionShop around for insuranceMaintain itRepair itSell itCar poolPublic transportation?Move closer to campus

Save on EntertainmentRent a DVD vs. going to a movieTake a few bucks and leave your

wallet at homeVolunteer for local eventsSwap and shareDo you really need cable? Take poor friends with you!

Making Your Budget StickHave a plan and write it downEliminate temptationsUse CashPrioritize your spendingReward yourself when you meet

goalsThink long-termFind a system that works for YOU

If you aim at nothing…….you’ll hit it every time.

What’s next?

Understanding CreditNovember 14th at Noon

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