School Year Budgets

Think beyond the bank balance check: learn to budget

How many times a week do you check your bank balance? If it’s more than once or twice, you probably need to do a better job of budgeting for the school year. After all, if you stick to a budget, you can be pretty confident you’re not going to run out of cash!

Podcast transcript

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PETE: Welcome to How Not To Move Back In With Your Parents here on the IU MoneySmarts Radio Network. I’m Pete the Planner joined as always by Alex. Alex, hello, hello.

ALEX: Hello.

PETE: So as you know, because it’s your job. This podcast helps students understand the financial ramifications of their decisions now and when they graduate. And so, this whole semester, all year long, we’ll be talking, eight-minute episodes, some tips to help people to make the best decisions. Does that sound all right with you?

ALEX: Sounds good, I’m ready to go.

PETE: That’s what you signed on for. This week, we’re gonna kinda give an idea what the whole podcast is about. We’re gonna set some goals for the year, not our own personal goals, although you could use some push ups. You think?

ALEX: I don’t know what you’re talking about there.

PETE: But we’ll do some goals for the year, some financial goals, and we’ll wrap it up with a little quasi budgeting session and we’ll send you on your merry way. So that’ll work, so do you think kids budget? Do you think college students will look at a budget or is it completely foreign at this point?

ALEX: Not at all honestly. When we look at how much money we have, we are looking at our bank account at the total number and that’s how much we have.

PETE: That’s actually called something, seriously, I’m not making a joke, it’s called balanced spending. So the concept of balanced spending is when you just look at your balance, then you spend based on the information there. And it’s a relatively new phenomenon that came around when debit cards came around in the last couple of decades. And it actually causes people to spend up to 20% more money than they would by not constantly looking at their balance. Do you think in the 1980s people pulled out their check register and check their balance everyday before they went to class?

ALEX: Not at all, I barely know what a check register is honestly.

PETE: Yeah, well-

ALEX: [LAUGH]

PETE: It’s something that makes me feel old because I do. But do you check your check account balance frequently or how often do you check in?

ALEX: I do pretty frequently. I would say when I make a big expenditure, I’ll go in and check, see what’s going on in there, but every couple of days.

PETE: What do you think most students do? Do you think they check frequently? Cuz you know with email notifications and text notifications, you can find out, you can have it sky written.

ALEX: Yeah.

PETE: If you got enough money.

ALEX: Yeah, very frequently.

PETE: Yeah, so I guess one of the first things we wanna do is we wanna make sure that try not to check your checking account balance so frequently. Now here’s the thing, it’s gonna freak people out to say that, right?

ALEX: Yeah.

PETE: You get a little sweaty thinking about that?

ALEX: A little bit.

PETE: That and the blazer, you look nice.

ALEX: Thank you.

PETE: Nice blazer.

ALEX: Appreciate it.

PETE: Anyway, it’s radio, no one can see it, you’re actually not wearing a shirt.

ALEX: They’ll take our word for it.

PETE: So I think the first thing is you can’t panic because you’re not checking your balance all the time, that’s a really important element to this whole thing. But the reality with student budgeting is, they can’t just look at the money you spent from a semester standpoint cuz that’s kind of a doctor needed to do it, right?

ALEX: Definitely.

PETE: You think tuition costs and room and board or fees cost this or that, we’re gonna break it down in the months.

ALEX: Yup, we do. So let’s figure out exactly how much we think it should cost for a college student to live. Can you do the math?

ALEX: I can attempt to.

PETE: Okay, I’m gonna do the numbers and then you do the math, you grab a pen and a paper.

ALEX: I’m ready to rock, let’s go.

PETE: All right, so here we go. Food, we’re gonna go food for a month and this is gonna be outside of the meal plan, right?

ALEX: Right, which you’re gonna wanna stay as little as possible obviously. The meal plans are great to use, you need to use them. But I would say, honestly, a couple hundred dollars for food every month.

PETE: And you feel that’s realistic across every campus that we deal with, across every type of student, a couple hundred bucks seems about right.

ALEX: It does depend obviously, but especially if you’re living out in your own apartment, you’re definitely gonna be spending a couple hundred dollars.

PETE: Okay, so we’ll go a couple hundred over meal plan, I’m good with that. How about entertainment? Now entertainment, that’s pretty far ranging, I mean, it can be like Magic the Gathering. I don’t know what people do, but I mean it could be even just a party, and buying beverages for parties, things like that. Is a couple hundred bucks a month fair? I mean, cuz at that point it’s 50 bucks a week, right? Is that?

ALEX: Honestly, yes, it is. People, I would say, put their entertainment at the same level as their food in college, so you have to put it up there in importance.

PETE: What about transportation, and parking, and fuel, and all that sort of stuff?

ALEX: This one is a little trickier because it depends on your situation totally.

PETE: And what campus you’re at too.

ALEX: Exactly, some people use zero for transportation because they take the buses or walk everywhere. But some people live off campus and have to drive every single day a couple of minutes. So it could range anywhere from 0 to maybe $100.

PETE: Or even more certainly for gas. So lets call it a hundred, on average, I think that’s a good thing. So, right now, we have 500 bucks, I mean, to live as a student. Again, what we’re trying to differentiate here is a couple of things. Number one, this isn’t the cost of going to Indiana University, this isn’t the cost of going to school, this is the cost to live, to have a separate household. What’s interesting is when you go to college, you create a little bit of a problem because you create a separate household. If you’re not living with your folks or whatever, you have created an entirely separate household that has an entirely separate set of expenses. The best thing for you to do is A, to consider that way, and B, figure out how much that cost. So I think we’re about 500 bucks is pretty reasonable. And I know next week’s episode of Not To Move Back In With Your Parents brought to you here on IU MoneySmart radio network. We’re gonna talk specifically about getting a job. And what we’d like to do Alex, as you know is match up that job with the $500 a month worth of living expenses, that seems reasonable, right?

ALEX: Yeah. How much you need and what reason you need to get a job for. There are ton of different ways you could go with that.

PETE: Are there people you know that are working? And you work, I mean you have jobs here. Do you match up the income from your job for something specific, or is it just spending money, or is it just money that kind of goes into the pot. What do you think most people are doing?

ALEX: For me and a lot people, it’s simply to try to break even. So you come in with a certain amount in your checking account, which is how we think when we come into the year, and then if we can work enough, we can get to the point where we aren’t really losing money as the year goes on. We’re just kinda staying at that even point.

PETE: So I think that’s great, and I think we just take it a step further, and chunk it down a little bit more, and look at it from a monthly basis to say I’m gonna probably spend about 500 bucks this week, or [UNKNOWN] this week. Now that’s a hell of a week.

ALEX: [LAUGH]

PETE: This month, and then I just need to make sure I replace that with income. And what I can actually do is it can tell you how many hours you have to work, but the important part is setting a goal. And so Alex, I think if were looking at this from a year long perspective of the school year, financial goals that students can grab onto, frankly, I think to have three positive months, where you don’t go backwards is a good goal. Or to not use student loans for living expenses, is another great goal. What’s your goal? Putting you on the spot with your blazer, looking all handsome. What’s your goal for the financial goal for the semester.

ALEX: My personal goal is to break even. So every month if I can match up an income with those expenses, then I’m very happy with where I’m at.

PETE: All right, well next we’re gonna talk more about jobs. Get yourself a joby job. Why it’s important, what the academic ramifications of that are. If you wanna learn more about what we’re doing, at MoneySmarts, go to moneysmarts.iu.edu, there’s a few u’s in there, you’ll figure it out. Reminding you, this is How Not To Move Back In With Your Parents, here on the IU MoneySmarts Radio Network.

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