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Budget

Financial Skills to Develop Now

“Financial Skills That Your Future College Student (&parent) Should Be Developing Now”

As college funding professionals it is absolutely imperative that we understand the college preparation experience from two specific perspectives.  The first is the academic admissions process itself, so that we can help students optimize their experience in higher education for the brightest future possible.  The second is the financial side of the process – without which the higher education experience is impossible to begin with!

However, we have seen time and time again that, in order for things to work optimally during the college years, the financial side of things CANNOT be left only to the parents.  It is absolutely crucial that young people gain a respect for and understanding of money, of the costs inherent to college, and of the importance of their personal role in keeping the financial ship afloat during their college years.

It is no secret that college or university in America is an expensive proposition, and it does not appear to be getting cheaper any time soon.  For this reason, the most successful students at the next level are going to be those who are able to excel academically, yes, but also those who are develop and implement good financial skills and decision-making throughout their college experiences.

We are aware that there are adults who have not learned some of these skills for themselves, or some who learned them later than others.  This reality does not change the importance of young people learning these skills and responsibilities as early as possible, so that there are not additional financial hurdles that could cause a student to be unable to finish his or her college degree due to poor money choices.  (Yes, sadly enough this does happen, and in most cases it can be avoided with some preventive work!)

Our main focus is on helping families and student to achieve their goals – this process becomes infinitely easier when the following skill set is understood and implemented early in a young person’s life.  Should there be any additional questions about the points listed in this month’s newsletter, please feel free to contact us directly.  We have many years of experience in helping families to make these processes work for themselves both in the home environment and away at school, and it is our pleasure to assist in making them work for you and for your college bound student!

1) Plan a Monthly Budget

Caring for one’s resources is an extremely vital skill. This skill can actually be learned from an early age and carried on throughout life, but it can also be learned later on if needed.  Regardless, understanding and managing one’s finances is something that will become vitally necessary while in college. The immediate level of management will depend, at least somewhat, on where your child will be living. If your child is on campus and will be participating in a meal plan at the cafeteria then budgeting for food will be less complicated, for example. However, if your child plans to live (or eventually move) off-campus then budgeting will become even more important.

No matter where s/he lives, you and your child can decide together which things s/he will be responsible for purchasing. For example, your child may want to have money set aside for entertainment or travel while you, as the parent, may want to cover all books completely. Communication and planning are the key, here.  Once you’ve decided who is responsible for what then you can move forward.

There are three things that should be considered when setting up a budget:

  1. Big Picture: What are your goals? What do you plan to do with the money you have each term or semester?
  2. The How: What will you use to manage your money? What tools or strategies work for you?
  3. The Gory Details: What are your spending habits? Do you need to adjust some habits to align with personal financial goals?

Answering these questions first will help while setting up a monthly budget.

2) Start A (GOOD!) Credit History

Getting started on a credit card for a newly minted college student can be a precarious venture for many young people.  The fact of the matter is, that a college student WILL be beginning his or her credit history with the first year of higher education… for better or for worse.  However, if the college freshman is responsible it can be an ideal time to start his or her positive credit history.

If your child is ready for a credit card then this might be just the time to get his or her credit history started. Getting this history started now will help your child down the road. When they are ready to rent an apartment or buy a car, a credit history will be generated and the longer it is with a clean record will make it easier for them to negotiate and find the best possible deals. There are many cards that have a very low credit limit, say $500, or so. This way your child can begin to work with the responsibility of paying a bill or two with the credit card and then pay it off each month to build positive credit history.

Guiding them to understand that the card is really a tool and not free money, this is the key! If they understand that it is to be used in a responsible way then this will help them stay on the right path. You can also assist by helping them set up online reminders to pay their bills so they are never late on a payment.

3) Learn to Cook at Home

If your child plans on living off campus then this will give them a taste of ‘real life’ right away. One of the great things about living on your own is the chance to cook for yourself. If your child learned cooking skills at home already then living on his or her own should be a snap. Cooking from home has so many benefits. It is healthier and saves a lot of money. There are many online tools that can help with meal prep, shopping guides, etc. There are also many videos that can give cooking basics if s/he is unsure how to get started.

Meal planning (and sharing with like-minded roommates, if possible) can also make a hectic schedule go a lot more smoothly. Between classes and studying, it can be difficult to set aside a lot of time to cook a fresh meal. If meal plans are done in advance then your child can meal prep and in just a few hours can have meals planned and ready in the fridge for a whole week. A little bit of planning goes a long way!

4) Track Expenses

Tracking expenses can be really tedious, but it’s also important. It gives your child a bird’s eye view of exactly what his or her spending habits are. There are several ways that you can track expenses. The good old-fashioned way is holding onto receipts and sorting through them at the end of the month. This is time consuming but helpful. There are also numerous apps that can link to your checking account that will file the purchases according to the names you’ve given them such as: rent, entertainment, car payment, etc.

Tracking expenses is a great way to see exactly where your child is spending his or her  money. It is difficult to make adjustments and changes if s/he is unsure of where the money is going every month. This way, s/he has a clear idea of which areas are working really well and which areas could use some improvement.

5) “Do I Really Need This?”

This can be difficult for young adults and regular adults alike. Being on your own requires a lot of discipline and that is not always the easiest thing when someone is out of the house for the first time and are no longer under the direct guidance of a parent or guardian. It is important, however, to begin to develop the habits of self-discipline and self control.

There are many things in life that may look like a need (especially if we are to listen to marketers and advertisers!) but in reality they are actually a want. Delaying gratification and living without for a while can develop character in a young person. One question your child can ask whenever s/he is about to make a purchase is, “Is this a need or a want?” If it’s a want then it is important to have the maturity to be able to re-think the purchase again.

6) Keep the Future in View

There are so many changes happening when your child begins college. S/he is likely away from home for the first time. S/he is in a new place. S/he will have to make decisions about her life on her own. These are huge things! That is why it is so important to begin early, ideally before college, to encourage your child to begin with the end in mind.

Encourage them to have their own financial goals. It could be to save for a game or event or something smaller than that, but give them the incentive to see beyond the current moment. If they understand that their choices today impact their tomorrow then they may be more thoughtful and mindful in the decisions that they make.

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            Some of these tasks might seem more challenging than others for some people, but we have seen the efficacy of them in making the college experience work financially for young people and their families year after year.  There is no question that they are an important part of the process of becoming an independent young person and setting the foundation for a bright future after the college years have ended.

Until next month,

Financial Realities of College-how much do you share?

     

 “The Financial Realities Of College:

How Much Should YOUR Child Know Before Starting?”

As summer is in full swing it may become more and more challenging for families to think about preparing for college.  We mentioned last month, planning for college is about having conversations.  Be sure to include the reality of college expense.   Unfortunately, for a variety of reasons, these financial details are often ignored… and both parents and students can be guilty in this regard.  This can definitely have a detrimental  effect on their levels of financial, academic, and personal stress during the college experience.

We understand fully that preparing for college or university studies can be stressful, in many ways.  Perhaps because of this reality, there can be a tendency for people to want to ignore some of the more challenging topics related to the transition to the next level of education.  However, ignoring these topics does not make them disappear.  By the same token, if only the parents (or, more rarely, only the students) are involved in these preparations, then it is not a team effort and there can be miscommunications and problems further down the road.  Our experience has been that it is absolutely vital for parents and students to have a mutual understanding of how things are proceeding for college preparation.

For this month’s newsletter, then, we want to explain a few of the most important elements that new college students (and high school students) should understand when it comes to starting their experience in higher education.  Yes, there will be a lot of students in their peer group – far too many, in our experience – who have no idea about these things.  However, rest assured that this lack of knowledge will more than likely become something that will come back to haunt them in the end.

As college funding professionals – and people who deal with these things on a daily basis – we want to help you and your family to experience a smooth transition into and through college or university studies.  We have a special skill set and will be happy to assist in any way possible with your family’s plans in this regard.

 Be Clear From the Beginning
Culturally, we tend to have many “taboo” subjects in the US. Depending on the individual, they may range from religion to sex to money. The subject of money, in particular when it comes to higher education, can get families into deep water if not dealt with from the very beginning with honesty and clarity.
How to pay for college should be a family discussion. This is a subject that should take center stage when getting ready to choose a school. It will have a lot to do with the choices your child will be able to make about where to go. It can also have a big impact on the family for the future.
If your child has his or her heart set on a ‘dream’ school then it is important to have the discussion and have the plans in place to cover the costs of such a school. This can all be done strategically and carefully, as well, with a thorough college funding expert. No parent wants to be saddled with massive amounts of debt when looking to cover costs at a prestigious school, nor do children want to feel that they have become a burden that the family has to bear in order for them to attend school.
Communication and (early!) preparation are really the keys, here. Will the parents be covering the entire costs of college? Will it be a combination of loans for the child plus what the family is able to contribute, or can this be avoided with proper planning?  (Note: it often can.) Having clear goals from the beginning and discussing those goals openly as a family will only bode well for the future college student. Tackling those goals with an expert will make it possible to move forward with those plans smoothly and successfully.

Focusing on the “Why” of College
Unfortunately, we see that students may not fully grasp the concept of ‘why.’ In fact, many visit colleges and make decisions on whether to attend or not based on a ‘vibe’ they get at the school, or where all of their friends are planning to go. It is important to make the most informed decision possible when going to college. This starts with the ‘why’ of going to college and then extends all the way through to the ‘where’ of going to college!
Some of the things that should be discussed and explored before beginning a college search include finding out what your child’s academic motivations are. Once these are laid out, it can be easier to look at options at that point. Clarifying interests and academic goals and motivations will make choosing the right college easier and it will mostly likely be a much better return on the investment. Not every child is clear on his or her ambitions in the teen years, however. This does not mean that all is lost. If they are not sure exactly where their academic focus is you are still able to make informed decisions. If they are able to narrow their interests down to a few different areas then you can search for colleges that have strong programs in the areas where their interests lie.  All of these discussions, when completed early on, can go a long way toward making the transition to college more manageable.

How (Or How Much) To Contribute
Many parents feel guilty if they determine that their ability to completely pay for their child’s education is not possible. It is easy to find parents who have gone into massive debt in order to make their child’s dreams of a college education possible even when it puts their own financial stability in jeopardy. This is one instance where having a solid college planning expert will help to ensure that these types of dire situations can be avoided.
Parents taking stock of what is realistic and what their child’s goals are will be very important in the part of the planning process. Do the parents want their child to attend a specific school?  Even more importantly, is that school a good fit for the student?  If so, is it currently possible to send them there, considering academic and financial realities?  What other options are available?  Once these questions are asked then the parents can move forward and see what will be required in terms of their contribution.
It is also important for parents to understand that where their child goes to college is not a reflection of their parenting skills or who they are as people. Keeping their child financially secure is a major requirement for parents and placing them in a school that they cannot afford and/or will place an undue burden on their child by way of student loans is not a great way for a child to be starting out in life. Planning ahead and making prudent choices based upon real financial circumstances and careful planning with an advisor will ensure the best choice possible is made that will benefit all parties over the long run.

Managing Parental Contribution/Retirement
There is no question that paying for a child’s college education can be a big sacrifice for parents. Parents who have an average annual income of $100,000, for example, can find that college expenses for just one child run $100,000 (and that is being moderate)… which can mean that they should expect to work an extra 10+ years in order to recoup those costs. That could mean delaying retirement in most cases – or, as mentioned above, saddling kids with significant student debt.
Because of these realities, this is another area where careful and early planning can make all the difference. The right adjustments and placing money in the proper strategic places may help to prevent some of the drastic measures to which many people succumb. These are definitely things that can and should be discussed with the college planning advisor – and the earlier that happens, the better! 

Probably the most important element of this part of college preparation can be boiled down to “communication!”  When people do not know exactly what is expected of them (financially, or in any other facet of life) then they are much more likely to make significant mistakes.  This is even more apparent when it comes to young people who are just starting out on their own – at college, or anywhere else… the more things can be clarified and communicated, the more likely they are to be able to manage these expectations successfully.

Until next month,

College Planning 101: the ‘B’ word(Budget)

Cost-Saving Strategies for College

That You Can Begin to Implement NOW

At Midwest College Planning, we never stop thinking about how to save families money on college. If you’ve followed us for any amount of time, you already know that we believe there’s no wrong time to start planning—and no single path to success.

Saving on college costs is about more than just smart financial planning (though that’s a big part of it). It also means helping students and parents develop habits and strategies that ease the financial burden—before, during, and even after college.

Paying for college can feel overwhelming. But there are practical ways to reduce costs—and we’re here to walk you through them.

Strategy 1: Pool Your Resources Early

If your child is receiving financial help from grandparents, relatives, a part-time job, or even birthday checks from Aunt Susan, it all adds up. Make a habit of tracking every dollar from every source—because when everyone knows what’s available, everyone can work from the same game plan.

Here’s what to include in your budget:

  • One-time contributions: Gifts, savings, and other non-recurring funds

  • Monthly income: Earnings from a job or allowance

  • Financial aid relief: Grants, scholarships, and other school-related support

When you create a clear picture of what you have, it’s easier to see what you need—and to avoid surprises later.

Strategy 2: Don’t Fear the Budget

Yes, we said it: budget. Creating and sticking to one is the only reliable way to manage college costs. We’ve seen it make or break a family’s financial peace of mind.

When building a college budget, make sure to cover the following categories:

  • Income: Total all one-time and monthly sources

  • Fixed expenses: Rent, tuition, utilities—same every month

  • Variable expenses: Groceries, books, supplies—change monthly

  • Necessities: Non-negotiables like textbooks, laptop, school fees

  • Wants: Nice-to-have items that make campus life more comfortable

  • Discretionary funds: A set amount for fun—without going overboard

  • Savings: Yes, even in college! Emergencies happen, and saving is key

A realistic budget helps students build healthy money habits that last long after graduation.

Strategy 3: Cut Costs in Everyday Life

You don’t have to sacrifice fun to save money. With a little creativity and planning, students can trim costs in ways that add up fast.

Here are some of our favorite, student-tested ways to save:

  • Rent or buy used textbooks (don’t pay full price!)

  • Set a weekly limit for eating out, and use a meal plan or cook at home

  • Pay bills on time—avoiding late fees is free money

  • Skip cable; stream shows on a laptop

  • Sell items on eBay or Facebook Marketplace for extra cash

  • Take advantage of free campus events—movie nights, club activities, and more

  • Brew your own coffee instead of daily café runs

  • Only borrow what you need in student loans

  • Bike or walk on campus instead of keeping a car

These small decisions can make a big difference—especially over four years.

Strategy 4: Re-think the “Four-Year Experience”

Don’t worry—we’re not suggesting skipping college. In fact, we’re here to help students finish strong. But more and more families are realizing that a degree doesn’t have to take four years—or cost a fortune.

Some students are able to graduate in three years, saving thousands in tuition and living expenses. How?

  • Take Advanced Placement (AP) or dual-enrollment classes in high school

  • Enroll in community college for general education credits

  • Consider summer courses to stay on track or get ahead

  • Start at a lower-cost college and transfer to a four-year school

As long as you confirm that credits will transfer, this strategy can lead to big savings—without sacrificing your child’s educational goals. After all, the diploma only has one school’s name on it!

Paying for college doesn’t have to mean going broke.
With the right planning, the right mindset, and the right guidance, your family can make smart choices that lead to a brighter (and more affordable) future.