- Identify sources of income in your life and how to set appropriate financial goals
Sources of Income
Paying for college is a big challenge, but the following financial resources can help:
- Jobs: Full-time students may find part-time work on or off campus, while part-time students may work during the day and then take evening classes. Students can also talk to their guidance counselor and financial resource department about work-study opportunities, which allow students to receive money for completing work related to their studies.
- Free Application for Federal Student Aid (FAFSA): This free application requires students to answer questions regarding their background and personal finances in order to find out how much financial assistance they might qualify for. The financial assistance comes in the form of government loans, grants, work study, or scholarships. Financial aid will be discussed in greater detail later in this module.
- Loans: Students can apply for federal loans or personal loans through banks. Loans accrue interest and eventually need to be paid back.
- Grants and scholarships: Students can apply for grants and scholarships through their institutions, local businesses, or online organizations. Scholarships may be awarded on the basis of merit (grades, achievements, volunteer work, etc.), financial need (economic status), or some other set of criteria (achievements and ethnic background, for instance). Unlike loans, grants and scholarships don’t need to be paid back.
Setting Financial Goals
Setting financial goals for yourself is one of the best ways to track and manage your expenses. The following strategies can help:
- Create SMART goals: SMART stands for specific, measurable, attainable, realistic, and timely. These kinds of goals are more manageable and can help you reach your final target more easily. For example, instead of setting a broad, vague goal of “paying for college,” you might set a goal of paying off your two college loans five years after you graduate. This more specific, measurable goal can help you keep track of your progress and whether you need to make changes to reach it.
- Monitor your spending: Try keeping track of what you spend money on during a one-month period. This can help you see where your money goes and where you may be able to save.
- Create a budget: Based on what you discovered after monitoring your spending, create a monthly budget you can stick to. While some expenses, such as food and transportation, are necessary, you may find that you can save money on both by riding a bike (instead of driving) to school and eating out in restaurants less.
- Consider working: Some students have full-time jobs while attending college, whereas others may not have a lot of time to work if they’re taking a full academic load. Depending on your circumstances, it’s worth looking into employment opportunities both on and off campus. Even if you feel like only a couple hours of work per week are possible, it could help you pay for something like books so you have one less thing to worry about when you graduate.
- Choose loans wisely: Many college students need some sort of financial support through loans. While loans are a good way to pay for tuition up front if you don’t have the money, remember that they accrue interest until you pay them off. That means that you will end up paying back more—in some cases, thousands of dollars more—than you initially borrowed. Make sure you investigate and apply for as many scholarships and grants as you can (since they won’t need to be repaid), and shop around for the loans with the lowest interest rates and best repayment plans. Check with the financial aid office on your college campus—they can provide additional help.
These are only some steps you can take for creating college financial goals, but it’s important to find the right ones for you.