5 Mistakes to Avoid When Creating Your MBA Budget
As an MBA student, you almost certainly appreciate the value of having a sound budget, but busy college life can cause you to easily veer off track with your finances. In order to graduate with as little debt as possible, avoid making the following budgeting mistakes.
1. Underestimating Small Expenses
When planning your MBA budget, you’ve most likely considered your tuition and other school-related expenses, but you may discount how quickly smaller expenses add up. Track every expenditure for a month to see just how much you’re spending on items like coffee, quick snacks, and transportation. You may find that those “little” expenses are adding up to large amounts.
2. Not Taking Full Advantage of Grants and Scholarships
You may discover with some research that there are a variety of opportunities to obtain money for school that doesn’t need to be repaid, which can take a lot of strain off your budget. Make sure to apply for financial aid in time to be eligible for grants. The FAFSA should be filled out as soon as possible after January 1. You must fill out this government form before you qualify for grants or low interest federal loans.
Keep in mind that there are also many opportunities for scholarships, even for an MBA, and they aren’t all just for students at the top of the class. You can find scholarships for students of varying ability levels and criteria. Sites such as Fastweb.com match you up with scholarships targeted to your various interests and skills. Other good locations to seek scholarships include your school, your local town and state, professional organizations in your field of study and membership organizations, such as Rotary International.
3. Failing to Make Your Budget Reasonable
A common problem is the urge to spend as little as possible, resulting in your creation of an unrealistic budget that you can’t live by, no matter how hard you try. A realistic budget includes all of your expenses, including the smaller ones. Add some slack in your budget to account for unexpected expenses. That budgetary cushion will help keep you in the black every month.
4. Bad Recordkeeping
You won’t be able to stay on track with your budget if you don’t record all of your expenses every month. By recording everything, you become aware of exactly where your money is going. It enables you to know where to cut down on spending when necessary. Start a spreadsheet, spiral notebook, whatever works best for you—but be diligent and comprehensive.
5. Being Stingy
Of course you want to save as much money as possible to minimize your debt burden at graduation, but cutting expenses too far is just unrealistic. As a matter of fact, cutting back too much can lead to a spending binge that will completely blow your budget. Add some wiggle room to your budget for the occasional splurge at the coffee shop or salon.
A solid and workable budget is your financial friend. Use these tried and true budgeting tactics, and you’re likely to graduate from business school with your MBA and a clear sense of your finances and how best to manage them.
Written by Ashford University staff.