Back-to-school: Leaving the Nest Should Include Financial Strategy Says LSU AgCenter Family Economist

Jeanette A. Tucker  |  4/19/2005 10:28:30 PM

LSU student Leah Ann Baker (Rayville, La.) finds plastic containers just fine for furniture when on a tight budget.

News You Can Use For July 2004

Moving away from home for the first time is a pivotal moment in life. It is one of the rights of passage from youth to adulthood, say LSU AgCenter family economist Dr. Jeannette Tucker.

Whether your first place is a room in a dorm, in a fraternity or sorority house or an apartment with roommates, it is still your own. You can decorate it anyway you please, invite over whomever you want and stock your refrigerator anyway you wish. It is up to you.

"Independent spending decisions quickly become an everyday occurrence for college students, but they also involve an incredible amount of financial freedom that most young adults are not prepared to handle," Tucker says.

Living at home usually meant that parents paid for most living expenses. It is a rude awakening when bills start arriving in the mail once you are on your own. Phone bills, credit card bills, utility bills and car payments are just some of the new arrivals that college students may find in their mailboxes.

"It is a good idea to prepare a budget prior to moving out if you can anticipate your expenses," Tucker advises, but adds, "If it is impossible to prepare a budget in advance, make one as soon as you begin living independently."

How do you draft a budget? The family economist says to begin by estimating your monthly income from all sources, such as jobs, student loans, scholarships, parent’s allowances and gifts. This total should be the amount of money left over after you have paid your tuition expenses. Then determine how much you will be able to spend for each of these budget categories: housing, food, clothing, health, transportation, apartment purchases, savings and miscellaneous.

To simplify this step, multiply your total income by the following percentages, which represent the average expenditures by college students: housing 31percent, food 16 percent, clothing 6 percent, health 5 percent, transportation 20 percent, apartment purchases 7 percent, savings 7 percent, miscellaneous 8 percent.

Tucker says that if your total expenses are more than your total income, determine which expenses can be reduced so that you can live within your means.

She says also to keep in mind that you will experience many first-time move-in costs. Some of these costs will not apply if you live in a dorm or a fraternity/sorority house. But if you choose an apartment or house, numerous up-front costs will need to be paid. Some of the most common up-front costs include application fee for apartment, deposit for apartment, deposit for pets, deposit for electric service, deposit for gas service, deposit for telephone service, installation fee for cable, Internet service and first month’s rent on apartment.

In addition to these up-front costs, if your new residence is unfurnished you will need to come up with the money to equip your place with the furniture, appliances, utensils and other house wares that you need – sleeping on the floor gets old and painful quickly! Of course, the cost of furnishing your new place can be dramatically reduced by accepting donated furniture from your relatives or by shopping garage sales and thrift shops.

The reality today is that most young people want their places to be furnished just as nicely as the homes they just moved from, complete with computer, entertainment center and all the amenities. These items cost money, and, more often than not, will be paid for with borrowed funds. Although paying with credit seems easier than paying with cash, it can be much more costly in the long run.

As students move away from home to begin their rite of passage into adulthood, Tucker advises them to prepare and follow a budget, consider housing up-front costs and avoid getting caught in the trap of using credit cards to finance a lifestyle they can’t afford.

For information on related family and consumer topics, visit the FCS Web site at http://www.lsuagcenter.com/Inst/
Extension/Departments/fcs/ For local information and educational programs, contact an extension agent in your parish LSU AgCenter office.

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On the Internet: LSU AgCenter: http://www.lsuagcenter.com/Inst/
Extension/Departments/fcs/
Source: Jeanette Tucker (225) 578-1425 or Jtucker@agcenter.lsu.edu

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