BYOB
Build Your Own Budget
Build Your Own Budget
What is a budget?
 Spending guidelines

◦ Creating a realistic budget
◦ Budget S.O.S. group activity
Making it stick
 Benefits of starting now
 Resources

Budgeting

What 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 months
College 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
Food
13%
Other
10%
Savings
10%
Transportation
19%
Health care
6%
Entertainment
5%
Clothing
4%
Housing
33%
Source: U.S. Bureau of Labor and Statistics
Budgeting the Cost of Attendance
Guideline %
Per Guideline
Student 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
$1,595
$1,595
$1,505
Monthly Budget
COA = $15,950 / 10 months = $1,595 per month
*Tuition/Fees, Books/Supplies, USMLE have their own budget.
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
Monthly loan payment
$58.33
Total payments
$7000
Total interest*
$2680
*4 yrs school, 6 month grace, 10 year repayment
$5,069.00
Financial Aid Adjustments

Extra 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 Pitfalls

Beware 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 Ramsey
author 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 group
 Collection of tips will be posted to web

Save on Groceries

Become 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. Apt

House Costs
◦ Electricity and gas
◦ Water, trash, sewer
◦ Yard maintenance

+$75
+$65
+$25
Time Costs
◦ Yard maintenance
◦ House cleaning
4 hours
4 hours
Total possible monthly savings: $165
Total time savings: 8 hours
Save on Transportation
Raise insurance deductible to $1,000
Consider dropping comprehensive or
collision
 Shop around for insurance
 Maintain it
 Repair it
 Sell it
 Car pool
 Public transportation?
 Move closer to campus


Save on Entertainment
Rent a DVD vs. going to a movie
 Take a few bucks and leave your wallet at
home
 Take poor friends with you!
 Volunteer for local events
 Swap and share
 Do you really need cable?

Save on Banking

Free 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 Stick
Have a plan and write it down
 Eliminate temptations
 Use Cash (or credit….)
 Prioritize your spending
 Reward yourself when you meet goals
 Think long-term (remember 6.8%)
 Find a system that works for YOU

Benefits of Starting Now
Save 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 Resources

http://som.missouri.edu/financial/smartdocs/
Office for Financial Success
 AAMC : FIRST for Medical Education
 Bankrate.com
 www.kiplinger.com
 Mint.com
 www.daveramsey.com
 www.suzeorman.com

What’s next?
Demystifying Credit
November 4th at Noon
M105