BYOB Build Your Own Budget

Build Your Own BudgetWhat is a budget?Spending guidelines

◦Creating a realistic budget◦Budget S.O.S. group activity

Making it stickBenefits of starting nowResources

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 monthsCollege Expenses under your control

◦Living expenses - $782 per month◦Transportation - $303 per month◦Personal stuff - $510 per month

College Expenses NOT under your control◦Tuition and fees◦USMLE exam fees and travel◦Books and supplies (allowances by year)

M1=$2380, M2=$1020, M3=$930, M4=$560

Spending Guidelines

Housing33%

Transportation19%

Food13%

Other10%

Savings10%

Health care6%

Entertainment5%

Clothing4%

Source: U.S. Bureau of Labor and Statistics

Budgeting the Cost of AttendanceGuideline % Per

GuidelineStudent A Student B

Housing – 33% $526 $558 $600

Food – 13% $207 $230 $200

Transport – 19%

$303 $300 $210

Clothing – 4% $63 $60 $73

Entertain – 5% $80 $80 $85

Health Care – 6%

$96 $207 $207

Savings – 10% $160 $10 $10

“Other” – 10% $160 $150 $120

Monthly Budget

$1,595 $1,595 $1,505

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

COA = $15,950 / 10 months = $1,595 per month

What is $3 a day worth?Daily Cost $3.00

Monthly Cost $90.00

Months in Year 12

Total Yearly Amount $1,080.00

Total borrowed after 4 years $4,320.00

Annual Interest Rate 6.8%

Interest after one year on first loan $260.00

Interest after four years on all four loans

$604.00

Interest during grace period $145.00

Total owed at repayment $5,069.00Monthly loan payment $58.33Total payments $7000Total interest* $2680*4 yrs school, 6 month grace, 10 year repayment

Financial Aid AdjustmentsExtra money? Return it!

◦You have 120 days from disbursement to return any portion of your loan without penalty (it’s in your promissory note)

◦Email me the details – I can specify which loan to return while you can’t

Ask for budget adjustments for car repairs, medical expenses, daycare, computer purchases, etc.

Budget PitfallsBeware of variable expenses

like…◦Parking◦Eating out◦Gifts◦Fun money◦Cell phone◦“Miscellaneous”◦Dry cleaning/Laundry

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

-Dave Ramseyauthor of “The Total Money Makeover”

Budget SOS (Save On Spending)Discuss budgeting pitfalls and

saving tips in the following areas:◦Food◦Housing◦Transportation◦Entertainment◦Personal

Designate a scribe for the groupCollection of tips will be posted to

web

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 cleaning 4 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 homeTake poor friends with you!Volunteer for local eventsSwap and shareDo you really need cable?

Save on BankingFree checking vs. “free” checking

◦Balance requirements, checks, etc.◦Overdraft fees, bill paying fees, etc.

Convenience fees◦Check card fees◦Using other ATMs

Discounts and Services◦Using multiple services◦Automatic payments◦Overdraft protection/Line of Credit

Making Your Budget StickHave a plan and write it downEliminate temptationsUse Cash (or credit….)Prioritize your spendingReward yourself when you meet

goalsThink long-term (remember

6.8%)Find a system that works for YOU

Benefits of Starting NowSave money

◦Means fewer debt problems◦Better prepared for future◦Your borrowing from your future income

Learn new money tools◦Take control of unknown◦Be prepared

Reduce stress

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

Online Resourceshttp://som.missouri.edu/financial/smart

docs/

Office for Financial SuccessAAMC : FIRST for Medical Educatio

nBankrate.comwww.kiplinger.comMint.comwww.daveramsey.comwww.suzeorman.com

What’s next?

Demystifying CreditNovember 4th at Noon

M105