BY LAWRENCE PERSKY
For the majority of Bruins reading this article, you are familiar with the ins and outs of UCLA and know what comes with the start of fall quarter. For the rest of you, this may be the first time you have experienced a sense of independence and the responsibilities that come with your newfound freedom. One important responsibility often overlooked by many students is budgeting.
Budgeting in and of itself is not that complex and revolves around a few basic principles. The first principle is knowing the total amount of money you have available to spend. For many students, financial aid is their main source of “income,” and they will be looking forward to receiving their refunds soon in their Billing and Accounts Receivable account.
If you are like me when I was a student, then you know the joy which comes from seeing that large sum of money post to your online banking account activity. Instantly you realize, however, this sum of money will have to last you the entire quarter, if you don’t have any other financial resources. At that moment, I understood the amount of my refund was the total I had available to spend.
The next budgeting principle is making sure you know what your expenses are. I knew there were certain fixed expenses I was going to need to pay as a student ““ tuition, rent, books ““ and there were variable expenses I could also incur ““ food, clothes, entertainment. The fixed expenses were set amounts which were either billed to me in one lump sum or possibly on a per month basis but were always the same amount per month. The variable expenses were amounts which always changed depending on what I purchased.
I listed all of my fixed and variable expenses with estimated figures, then tallied the total. If my expenses were far greater than my available resources, then I either had to find a way to get more money or scale back my expenses.
The last budgeting principle is making sure you pay for what you need before spending money on other things. This is probably the most difficult for inexperienced budgeters because you have to separate your needs from your wants, even though both can be expenses.
Once I determined what my needs and wants were, I needed to prioritize my needs over my wants and then actually pay for the needs since those were more important. Back when I was in school, I wanted to use my refund on a Playstation 2 and Madden 2001. But these things were wants, not my needs.
What I needed to use my refund on was rent, school supplies and food. If I wasn’t careful, I would have spent that money on my wants and would not have any money for what I really needed.
After all of my needs were paid for, then I would consider if I could afford any of my wants.
By sticking to these three simple principles, I was able to successfully manage my finances over the course of my college career.
There will be hiccups along the way, such as not having enough financial resources to meet your needs or unplanned expenses. In these situations, you may want to consider taking out student loans, employment to bridge the gap between your resources and expenses, or work on building a savings fund that you can tap into from time to time when money gets tight.
If you are interested in student loans or more information on budgeting, make sure to check out the UCLA Financial Aid Office’s website at www.fao.ucla.edu, or the U.S. Department of Education’s website, studentloans.gov, for more information.
Lawrence Persky is a supervisor in the financial aid office’s counseling unit.