(This is a guest article by Courtney Stewart*)
If you are thinking about going back to school but are put off by the cost of higher education, don’t let that deter you. Here is a step by step guide to reworking your budget to help you afford that degree. Education can be expensive, but it is a worthwhile investment!
- Assess your income and spending habits
- Determine the cost of your education
- Find ways to cut back on expenses
- Start saving
- Apply for scholarships/student loans
Your basic budget is your adjusted income (the amount you take home from your paycheck after taxes, insurance, 401k, or other deductions that come out of your paycheck) minus your expenses. Your expenses include both your basic living expenses such as your rent or mortgage, transportation costs, groceries, credit card payments, and utilities as well as your leisure/entertainment budget. In addition, you should ideally be putting away at least 10% of your adjusted income into personal savings or a retirement account. If you’re not, now’s the time to consider advancing your education to increase your earning potential. You’ll want to reassess your spending to make room in your budget for your education.
Tuition is the primary cost of education, but there are others. You’ll need textbooks and other supplies, and you may also need to pay for additional childcare, transportation costs, or lab fees. You may also need to purchase a new computer or software. While this does add up, it is manageable if you get a realistic figure of what your total costs will be and budget for them. You may want to consider taking courses at an online college to help counteract some of these additional costs, since you’ll be able to work from home and around your daycare schedule.
While there may not be much you can change about your monthly rent, there are plenty of ways to make some changes in your budget and free up some money for your education expenses. Grocery bills can be slashed by shopping for sale items, clipping coupons, and choosing fresh foods over the more expensive processed foods. Your land line may be expendable if everyone in your family has a cell phone, or your cell phone plan may have minutes that you aren’t using. Libraries are a great resource for saving on entertainment expenses such as books, movies, games, and music for your family. And don’t forget to look at the smaller expenses - you are probably spending more on non-essential items than you think you are. All of those morning coffees, restaurant meals, and impulse buys can really add up. Try tracking all of your expenses for several months to look for areas of improvement.
Once you have reworked your budget to free up some money, you’re going to want to put it somewhere where you can access it (but only for education expenses!). You can open up a savings account with your bank, or shop around for the highest interest rate available at bankrate.com. Alternatively, you could put your savings into a 529 education account. These accounts are offered through your state and allow you to save for education while earning tax incentives. Your payroll may allow you to automatically deposit a certain percentage of your paycheck into a savings account, and if it doesn’t, make sure to manually transfer the money as soon as you get paid – before you have the chance to spend it. Once you get in the habit of removing extra money from your checking account, you’ll find that you don’t even miss it. If possible, you may want to consider getting a second part time job to put extra earnings toward your degree. Just make sure that you will still have time to study!
Finally, in an effort to minimize the amount you spend out of pocket, look into scholarships and financial aid. There are millions of scholarships available so it is worth finding and applying to ones that are a fit for you. Another option is student loans. Unlike scholarships, you will need to pay these back (with interest) after you graduate. The financial aid officer at the school you selected will be able to walk you through the process of borrowing the money to pay for your education.
It seems like a lot of work, but you’ll find that making room in your budget for education is the best investment you can make in terms of future earning potential, personal growth, and career success. Good luck!
*About the author: This guest post was contributed by Courtney Stewart, who writes extensively about online colleges and universities for EarnMyDegree.com.
*Image Credit: Photograph by Linda (Pane, amore e creatività) [via Flickr Creative Commons]