http://www.jmu.edu/finaid

http://www.jmu.edu/centennialcelebration/

James Madison University - Index

James Madison University - Madison Family Connection Fall 08 Edition - Index

BUdgeTIng 102
Budgeting at its finest
Before packing up the family
car and heading to Harrisonburg,
make sure to bring
one essential piece of paper: the student’s
budget. This little document
will ensure the student doesn’t overspend
and become dependent on
unnecessary loans and credit cards.
It is not uncommon for people
to commit to expenses (e.g., signing
leases, purchasing with credit)
first and then to secure the income
to pay for those commitments.
However, this pay-first-then-findthe-money
approach is backwards.
Proper budgeting would have an
individual know his income first
and to then develop a spending
plan. Let’s look at an example to see
how this works.
For a college freshman living on
campus, tuition/fees, room/board
and Internet fee are all included
in his JMU charges. These are
called the “billable expenses.” The
“nonbillable expenses” may include
items such as books, supplies, personal
care products, entertainment,
clothing and room decorations.
Now that the expense categories
are established, it’s time to evaluate
income.
For the example student, all
JMU billable charges are fully
covered through a variety of
financial aid sources. He worked
during the preceding summer and
saved $1,500 that he plans to use
during the fall semester. He is
not planning on working during
the fall semester, so this money
accounts for all the income he will
have from September through
December.
By Brad Barnett,
senior associate director financial aid and scholarships
Next, he must determine how
he will spend the $1,500 during
those four months. One method is
to divide it by four, which would
give him $375 per month to
spend. This is a great place to start,
but his expenses may not be the
same every month.
As a college student, he can
expect to spend a bit more when he
purchases books for the fall semester.
He might also expect another
spike in expenses in December for
Christmas. If he spends $450 on
books and another $300 on Christmas
gifts, then his $1,500 savings is
reduced to $750. Now, he can take
the $750 and divide that across four
months to give him approximately
$188 per month.
If the student wants to stay in
budget and avoid additional debt or
financial trouble, then his best bet
will be to categorize his spending
in a zero-based budget format to
make sure he does not spend more
than $188. For example, he could
set up his monthly spending plan
as follows:
$30 — personal care products
$40 — room decorations
$45 — entertainment
$30 — gas
$43 — extra (not allocated for
unexpected expenses)
This accounts for the $188 each
month. If he wants to spend more
than $188 in a particular month, then
he will have less in the other months.
The idea with zero-based budgeting
is that all of your income minus
expenses equals zero every month.
You spend the money on paper
before you actually do it in real life.
If he ends up spending $35 in
personal care products when the
month begins, then he needs to
reduce another category down by
$5 so he stays in balance. Remember,
income and expenses should
equal zero. If this is done, he will
not overspend.
It is extremely important to have
an “extra” category every month as
expenses will arise that cannot be
anticipated. For example, what if
this student becomes ill and needs
to visit the doctor? In most cases,
he can make his co-payment for the
doctor’s visit out of the $43 extra
amount and still keep his budget
intact. If he puts too much “extra”
in his budget, then he is not planning
properly.
Categories and amounts can be
created in any combination that
works for the student. This is just
one example to explain the concept.
If a student develops the habit of
living within a zero-based budget,
he will complete college with much
less debt than those around him,
call home less for money and will
have the behaviors in place to be
successful once he graduates.
For more information regarding
financial literacy topics such as this,
visit the Office of Financial Aid and
Scholarships at www.jmu.edu/
finaid. The site offers a podcast on
paying for college, a video on how
to apply for financial aid, budget
(i.e., cash flow) worksheets, and the
JMU Terms and Conditions for
Financial Aid document, which
explains many aspects of the financial
aid process and available aid
programs. M
By the numbers
(cont. from Page 3)
50
Aspiring to dispel
the stereo-type of
JMU as a “party
school,” students
and SGB members
collaborated
to publish a
booklet that
offers more than
50 alternatives
to drinking. So
you think JMU
is a party school?
More than 50 things to do at
JMU besides drink showcases
the numerous activities, places
nad events available on campus
and in the surrounding communitiets.
Conceived, written,
edited and designed entirely by
students, the booklet lists fun
local opportunities, including
lesser-known eateries, outdoor
adventures and some not-socommon
ideas like finding the
famed “turkey statues” at the
Rockingham County lines.sentatives
to the 2008 ONE Campus
Challenge Power 100 Summit in
Washington, D.C.
8,000 JMU
director
of
Photography Services Dianne
Elliott (’00) estimates that she,
her assistant Kathy Lam and
their student photographers shot
more than 8,000 images during
March’s Centennial Celebration
Week. See more centennial
images at www.jmu.edu/centennialcelebration/.
Centennial gala revelers pose in front of a photo of the Class of 1929 in the Festival Ballroom.
Fall 2008 5