Creating a Budget That Includes College Expenses
In order to begin saving for your child's (or your own) college expenses — whether you have 18 years or 18 months — you'll need to sharpen your pencil and rework your budget.
First, look at your budget to see how much you might be able to pull together each month by reducing your expenses. Then visit FinAid to determine how much you'll be able to save.
Monthly Expense |
Amount |
Ways to Reduce/Eliminate |
New Amount |
College costs |
$ |
N/A |
$ |
Groceries and household items |
$ |
$ |
|
Day care |
$ |
$ |
|
Contributions |
$ |
$ |
|
Savings |
$ |
$ |
|
Rent on furniture or appliances |
$ |
$ |
|
Entertainment/babysitting |
$ |
$ |
|
Eating out |
$ |
$ |
|
Rent or mortgage |
$ |
$ |
|
Car payment or lease |
$ |
$ |
|
Electric bill (average) |
$ |
$ |
|
Gas bill (average) |
$ |
$ |
|
Water bill |
$ |
$ |
|
Sewer bill |
$ |
$ |
|
Trash pick-up bill |
$ |
$ |
|
Cable/DSL/satellite bill |
$ |
$ |
|
Telephone bill |
$ |
$ |
|
Cell phone bill |
$ |
$ |
|
Bank charges |
$ |
$ |
|
Haircuts/manicures/pedicures |
$ |
$ |
|
Home equity loan |
$ |
$ |
|
Other loan |
$ |
$ |
|
Credit card or store-charge bill |
$ |
$ |
|
Credit card or store-charge bill |
$ |
$ |
|
Credit card or store-charge bill |
$ |
$ |
|
Credit card or store-charge bill |
$ |
$ |
|
Credit card or store-charge bill |
$ |
$ |
|
Credit card or store-charge bill |
$ |
$ |
|
Child support or alimony |
$ |
$ |
|
Car maintenance |
$ |
$ |
|
House maintenance |
$ |
$ |
|
Auto insurance |
$ |
$ |
|
Property taxes |
$ |
$ |
|
Gifts |
$ |
$ |
|
Events to attend |
$ |
$ |
|
Clothing and shoes |
$ |
$ |
|
Home insurance |
$ |
$ |
|
Vehicle registration |
$ |
$ |
|
Vacation |
$ |
$ |
|
Club membership |
$ |
$ |
|
Other: |
$ |
$ |
|
Other: |
$ |
$ |
|
TOTAL: |
$ |
$ |
Another way to determine your savings is to ignore the fact that you'll be earning interest on your money, and just multiply your monthly contribution by the number of months you have between now and the time your child will start college.
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Compare that number to today's tuition, fees, room, and board, and you'll have a good idea of how much college your savings will buy. The reason this method works fairly well is that college costs are rising by about the same amount that most investments are yielding.
If you're not satisfied with your potential savings, see if you can find extra money in your budget (by cutting back even further on your expenses), and then calculate how much you'll have saved by putting away that amount.
