Managing finances when you are in college can go a long way in ensuring that you graduate with no debts. You can manage your college finances with relative ease if you are willing to spend money wisely and save money when you can. Here are a few tips that you can use for effective money management in college.

Create a Plan for Expenses

The first step to managing your finances is to create a plan for your expenses. By creating a plan, you will be able to stay within a range and not go over what you can afford to spend in a period of time. One of the main financial problems students face has to do with borrowing money to meet expenses that their funds can’t meet. By borrowing frequently from more than one lender, you can pile up a huge debt by the end of college.

Your expense plan will help you establish benchmarks for expenses. At the same time it will give you a sense of flexibility for spending, because with an expense range, you can spend more freely, without exceeding your limit. For instance, with a strict budget restricting you to spending $10 a day, you may feel uncomfortable when you have an urgent expense to meet. Instead, create a range of $70 to $90 a week and this way you can spend more on one day, and spend less on another, giving you the freedom to decide how to spend money.

Start a Contingency Fund

A contingency fund is important for students because it can serve as a back up fund when something goes wrong. While borrowing money in a crisis from friends and family may be an option when you have the time to ask for and receive the money, it may not be possible when you are in immediate need of money. With a contingency fund, you can access money for your immediate needs without having to worry about who to borrow it from.

Avoid Using Credit Cards

Careless use of credit cards is another reason why students accrue debts. As money loaned on credit cards has a high interest rate, paying it off on a student budget can become difficult. If payments are not made on time, your credit card debt will keep accruing. So always avoid using credit cards; instead, use cash from your student fund.

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The economy is on a downturn and the cost of college education is rising. Students need to find cost effective ways to pursue their dream of college education, which is an expensive proposition for most. We offer some useful tips on how to go about funding your education in an affordable manner.

Ask Your Relatives
More and more relatives are chipping in with money to help their loved ones. A recent research says that almost 66% of grandparents have financially helped their kin for education purposes.

Cheaper colleges
Admission in community colleges can provide you with some financial relief. Community colleges are the cheapest colleges in the country and are becoming great alternatives for low and middle income families.

Tax breaks
Tax breaks are being offered by the federal government to almost around two million people. All these Americans get the benefit of the American Opportunity Higher Education tax credit – see if you are eligible for it as well.

Availability of loans made easier
More and more loans are being made available to borrowers. People with no credit history can borrow up to $5,500 while those of the age of 24 or higher can get a loan up to $12,500.

Cutting costs
Students can resort to various means to cut down their cost of living to save money. They can switch from staying at dorms to co-ops. Co-ops are cheap alternatives and can save around $5000 annually. You can also share rooms, buy used books to save a substantial amount of money.

Work for students
Many students are taking up part time jobs to earn money in their free time. Students are not allowed to work more than 20 hours a week, but that allows them to earn anywhere around $400-500 a week. This amount could just be enough to cover some of your basic living costs.

Easily available loans to parents
The federal government has made it easier for parents to obtain federal PLUS loans. These loans help parents to cover a student’s college costs without the help of financial grants or scholarships

Scholarships
You can apply for financial grants from Federal Student Aid to ease you burden of education costs. A student can appeal for a scholarship if he/she can document the facts relating to his or her need for financial assistance. There are other government and non-government scholarship programs also that you can explore.

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A Guide to Saving for Children’s College Education

When you think of saving for future expenses, the cost of educating your children is one of the most important financial needs that you should consider. College education does not come cheap and educating your son or daughter in a little known institution rarely has much value.

There are two aspects to saving for college that make it a much more attainable target than retirement saving. A look at current costs of education at a college of repute will tell you how much you will need in present day. With some research, you can find out how the cost has kept pace with inflation in the past. This will help you estimate how the fees and costs may look in the future, with fair accuracy.

You know exactly when you will need the funds so you also have a clear idea of the duration within which your investments and savings will have to yield the final sum. Unlike your retirement fund, your college fund has a specific target in dollars as well as a clear time limit. This is a great advantage when you need to pick and choose investment options to build the fund.

Starting Early in Life

Beginning your kids’ college fund early in your career gives you a clear advantage. The sooner you start accumulating funds, the better returns you gain, thanks to compound interest. In fact, if you are lucky enough to start investing during an economic boom you may build up your college fund well before the deadline. Then you can shift the investment to safe avenues like bonds so that they continue to earn steady income while being protected from the vagaries of the economy.

Using Stocks to Get the Best Returns

Many experts advise using stocks to build your college fund. Stocks offer the best returns of all investment options when you look at long term returns. Since your need for the college fund is still years away, you can afford to make optimal use of these high return investment avenues to build up the college fund with a much smaller initial investment portfolio.

Investing in 529 Plans

A 529 plan is one of the most frequently used avenues to create a college fund. There are many benefits to saving with these plans. Anyone can contribute to the account and claim full tax rebate on the earnings here. If your child does not opt for a college education, you can simply move the accumulated sum into the account of other family members. People with any income level can open and maintain a 529 plan without restrictions of any kind.

The money in this account can be used for the child’s education at any age. The government encourages saving for higher education by offering tax rebates on the money you pay towards your child’s tuition. These varied benefits make it easy for you to achieve your target quickly and easily so that your child is assured of the best possible education from reputed institutions when he comes of age.

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