Investing in your education is a great decision, but it is not one that comes without much planning and sacrifice. Did you know that one of the best ways to ensure responsible spending is to create a simple budget? A key area to focus on is your existing and projected expenses. In most situations, expenses can be cut by taking some time to think about them and truly valuing the expense against the benefit. This will help you determine which expenses are absolutely necessary, and which expenses are for unnecessary purchases.
Much like personal expenses, there are some educational expenses that are necessary during your time spent in online classes — and there are some that are not necessary. Understanding the difference between needs and wants is essential to proper financial planning.
Take a minute to think about some of your most recent purchases or investments. Were they absolutely necessary to accomplishing a goal? Or were some of the items bought simply because you wanted them? The answer to those questions will provide you with the difference between a need and a want. A need is anything that is absolutely essential to the accomplishment of a goal. A want is anything that complements or enhances the final product, but is not absolutely necessary to accomplishing the goal.
Before we look at educational expenses, keep in mind that the difference between a want and a need can be the difference between two items that serve the same purpose. For example, a local daycare and a Montessori preschool are both options for dependent care. However, the local daycare will probably be a much more affordable program, and serve the same basic function.
To find the educational expenses that are necessary to accomplishing your goal (i.e. receiving a degree), list all of the expenses you can think of and ask yourself if you could succeed without that expense. For reference, here are some expenses that would unanimously be viewed as needs:
- Tuition and fees
- Books for your classes
- Affordable transportation to and from campus (if a commuter)
- Room and board if a non-commuter, rent if a commuter
- Food/clothing/minimal personal expenses
- Dependent care
- Access to a computer and the Internet
There may be other expenses that are necessary, as each student is unique. The most important thing to think about is whether you could still accomplish the same outcome if you did away with that expense. If the answer is yes, then that expense is a want instead of a need. Examples of wants may include, but are not limited to:
- Any lavish personal expense; family vacation, new appliances for the home, new car purchase
- Paying non-educational bills with federal student aid
- Gym membership
- Costs for membership in alumni/school clubs or societies
Please note that just because the expense is a want does not mean you absolutely have to do away with it. In fact, sometimes a want can enhance your college experience. It is up to you as the student to determine what is worth spending money on and what is not. Utilize your knowledge of essential and non-essential educational expenses to make sound financial decisions.
By Ryan Laspina
Compliance and Default Prevent Specialist at American Public University System