California is the ideal location for students. The state has many top-rated universities, successful companies, different cultures, and many job opportunities.
The costs of rent, transportation, food, tuition, and entertainment can add up quickly. Even with a part-time job or financial support from family and friends, students can find themselves out of money by the end of the month.
While cutting out coffee and the occasional night out might cover it for a little while, a realistic plan for students to afford to live in California while studying will have to be based on their personal priorities and work within the confines of their actual expenses.
But there’s good news here for students. They don’t have to give up all their fun activities and interactions. What they have to do is make some choices as to how to spend their money.
Start With the Cost of Your Actual Lifestyle
Rather than making a budget based on the estimated amounts that students spend, many students create a budget based on their actual spending.
That difference matters.
Review the previous two months’ worth of transactions for your checking account and credit cards. Categorize each transaction by category. This will help identify all of the big money spending habits that seem to disappear in college.
- Rent and utilities
- Groceries
- Dining out
- Transportation
- Tuition and school supplies
- Subscriptions
- Clothing
- Entertainment
- Health expenses
- Debt payments
Seeing where your money has been going through tracking your money can be quite the eye opener as well. It’s surprising how those occasional restaurant trips, those food delivery orders, the occasional Uber ride or other ride-share trip can easily rack up in the hundreds of dollars for you each month.
A useful budget reveals where one spends money and helps to improve that behavior when it outlines planned spending.
Now, after tracking your spending, compare your spending with your income. Be sure to include income from: wages, scholarships, grants, family support, school financial aid (like in the form of a refund), and even income from freelance work that is reliable.
This creates a clear starting point for improving your spending. That is, you want to figure out what is draining your money, and which of your current spending are adding value to your life.
Treat Housing as Your Biggest Financial Decision
Housing is typically the biggest financial decision for most of the California students. Therefore, we should consider where we would like to live and how it will affect the rest of our budget.
Housing costs near campus may be higher but can save on other costs. However, higher rent can mean higher costs for housing that are further from campus, due to costs of other forms of transportation. The cheapest apartment may not always be the cheapest option in the long run.
Before signing a lease, calculate the full monthly cost. Include rent, utilities, internet, parking, commuting, renter’s insurance, and basic household supplies.
However, the positive effects of roommates can be destroyed quickly by poor communication. Payment for utilities, rent, shared items and responsibilities for cleaning, guests, and household supplies can cause many problems if not settled before the lease is signed.
Tenants should read over their leases very carefully. While seemingly minor details, such as late payment fines and charges for early lease termination, could end up being very expensive.
You may find that having a slightly smaller room or a longer commute is worth it in the end as it allows for enough money in your budget to afford to eat, to save and to afford other things that are important to you at University.
Build a Food Routine Instead of Relying on Willpower
The biggest challenge with regard to spending on food is the duality of necessity and convenience of eating out. A student might intend to cook all their meals, but then order take out after a long day of classes.
It is possible to eat well while on a very tight budget if you create a routine of sorts that allows for occasional splurges.
Some of the best meals to eat as a student are simple to make and include rice bowls, pasta, sandwiches, soups, eggs and frozen vegetables. Slow-cooker meals are also ideal as they can be left to cook all day while you are at class.
When buying groceries for yourself, it can be hard to not buy too many random foods when you are at the store. In order to avoid this, it is best to make a short list of what you need for the meals you have planned for the week and stick to it for your grocery trip.
Set a weekly limit for dining out. Instead of promising you will never eat out again, promise you will only eat out a certain number of times per week. Then, when your dining out money runs out for the week, you will have to go back to buying groceries for the rest of the week.
Food programs on campus can be an additional aid for students in need. While some may see using these programs as a failure, remember that they exist to support you in your academic endeavors.
The California Department of Social Services gives information about food assistance programs that may be used by eligible students attending California colleges.
Review the Long-Term Cost of Student Debt
The fact that student loans exist in order to allow people to complete their education does not mean that a student should review their options for taking on debt without also outlining a financial plan. Interest on loans can add up to a large amount of money before you know it, so it’s wise to have a sense of what it will take to pay back a loan before you agree to take it out.
For example, you need to know if you have a federal loan or a private loan and what the interest rate is for each loan. When will you have to start repaying each loan, and know the difference between paying the minimum on your loans and paying more than the minimum to put extra money towards the principal.
A student loan refinance calculator can help students and young adults research how different interest rates and repayment periods could affect their future monthly payments and total interest paid. While refinancing can be beneficial for some borrowers, it is not for everyone. By refinancing a student loan from a federal lender to a private lender, the borrower could be giving up federal repayment options, protections, and potential loan forgiveness programs. Therefore, borrowers should carefully research their options before making a decision.
Students would do well to make careful comparisons between their available options for refinancing, rather than blindly following a headline that says “cheaper than your current payment.”
Just because you can afford to make the minimum payment does not mean you are not making a huge financial mistake. Remember that a longer repayment term may increase the total amount that you pay over the life of the loan. Therefore, a lower monthly payment is only cost-effective if the overall financial impact is not detrimental to you.
Reduce Transportation Costs Before They Become Routine
Expenses can increase quickly in California. If a student is living in an area that does not have an abundance of public transportation, the cost of owning a car can add up quickly.
Yes, there are additional costs associated with owning and operating a car, such as fuel, maintenance and repairs, parking, insurance, registration, etc. The cost of owning and operating a car can quickly add up to over $1,000 per month, not including the monthly payment on the car.
Before students make the decision to bring a car to campus, they should calculate the full cost of owning a car while in school. The cost of a car, of course, is more than the monthly payment. Students will also have to pay for gas, for car insurance, for registration and for possible repairs. They will also have to pay for parking, for possible tolls, and for possible extra fees for things such as early bird discounts for parking.
To find out whether your college includes local transit in the student fees, and whether it offers any discounted passes for college students, and any campus shuttles, look into the college’s website.
Lastly, when you need to use a car for errands, combine as many as possible in a single trip. Preventing minor problems from turning into huge expenses is also important to note. For instance, not changing the oil in your car could lead to very expensive repairs down the line.
Make California Work for Your Budget
California can be expensive but in the end it is worth it for the students who reside there to create and manage a budget that will allow them to thrive in their studies while living in the state of California.
Make California Work for Your Budget – Practical is best. Know your numbers. Keep your housing costs low. Plan your meals. Review your debt. Restrict your spending on transportation. Set limits for yourself on spending for items related to social activities.
Small financial decisions seem insignificant on their own but, in reality, they are repeated many times and therefore have a big impact over time. Thus, saving $15 here and there will not have a significant impact on your budget but saving $15 every week will create breathing room for you in a relatively short period of time.
Students with reasonable financial plans don’t have to forgo having fun while studying in California. They can make the best of their financial situation, given they are managed sensibly, and flexible enough to be changed from time to time.
