Budgeting and Financial Awareness for Law Students
Creating a Law-School Friendly Budget
The cost of attending three years of law school can be a significant financial commitment (reference cost of attendance for Notre Dame Law School and cost of attendance for law schools in general), and taking out student loans is common. You can manage your debt by establishing and following a budget, borrowing only as much as you need, pursuing external scholarships, minimizing other debt, and making financial choices in law school that will not have long-term ramifications by increasing your debt.
Tools to Create a Spending Plan and Budget
Creating a monthly spending plan or budget is a vital first step in managing your finances and debt. A spending plan will help you identify your income and expenditures – and where you might be able to economize. While you may simply construct a monthly worksheet showing income and expenses and adjust when expenses exceed income, you may want to look at some websites offering budgeting and planning information and calculators and use an online personal finance tool.
Use a Budget Worksheet
If you prefer to budget using a spreadsheet you can create your own in Excel. Here are two sample budget worksheets to help you:
• Annual Financial Planning Budget Worksheet 1
• Monthly Budgeting Worksheet 2
Use a Personal Financial Software Application
There are several financial software applications, both online and via apps, to help you budget and we have listed a few of them below. The article, Best Personal Finance Software for Individuals, has a very thorough and honest review and comparison of some of the software and apps to find one that will work best for you.
Personal Capital — an award-winning finance app lets you see all of your accounts in one place and gives you a comprehensive view of your income, spending, and investment performance
Mint — a free money manager and financial tracker app from the makers of TurboTax that brings together your bank accounts, credit cards, bills and investments so you know where you stand.
Quicken — a top personal money management software, also has a companion mobile app
You Need a Budget — this software focuses on the foundation of your finances—the budget.
GnuCash — personal financial-accounting software designed to track bank accounts, stocks, income, and expenses.
Money Dance — personal finance software that is loaded with all the features such as online banking and bill payment, account management, budgeting, and investment tracking.
Budget Simple — an online budget tool, based on a spreadsheet format, that helps you find out where your money is going and the best way to cut unnecessary expenses.
My Spending Plan — users can monitor their bills and learn how to spend better by keeping track of their expenses with this software.
Other Websites to Assist
Financial Aid Budget Calculator — FinAid’s custom calculators can help you figure out how much school will cost, how much you need to save and how much aid you’ll need.
Budgeting Strategies — This website provides tips on how to take control of your day-to-day finances.
Mapping Your Future — This site helps students plan for higher education by offering reliable and unbiased money management advice and counseling.
How to Create a Budget
After you have decided how you will track you budget (using a spreadsheet or financial software application mentioned above) you are ready to create your budget.
Determine your Sources of Income
• Determine the amount of money available from savings and other resources such as parents.
• Calculate how much you are receiving in financial aid. Be sure to subtract loan origination fees from the gross amount of loans you are borrowing. An origination fee is charged by a lender on entering into a loan agreement to cover the cost of processing the loan and the fee varies by loan.
• If you have income from work, include that as well.
Determine your Expenses
• Calculate your tuition and fees for the term. For the 2016-17 year, tuition and fees are:
- Tuition = $53,812
- Fees = $485
• Calculate your other monthly expenses: rent, utilities, books and supplies phone, transportation, groceries, health insurance, credit card payments etc.
- You can look through your expenses for the previous couple months if you have records of them (credit card bills, receipts, etc.); or,
- If you don’t have a record of your monthly expenses, you should make one. Track your spending for a month and record it. You can track your spending in a number of ways: on paper, using a spreadsheet of financial software or one of the online budgeting tools mentioned above.
Total your Monthly Income and Expenses
- Subtract all of your expenses from all of your income.
- If your income is greater than your expenses, you can afford to reduce your borrowing. Reduce any private loans first, then PLUS loans, and then unsubsidized Direct Stafford loans.
- If your expenses are greater than your income, you will need to identify areas where you can save money. Cutting spending can be difficult, you should cover your “needs” first and your “wants” second. Could you share housing? Can you eat out less? Find lower-cost entertainment?
Monitor your Budget Monthly
Make sure that you stick to the budget that you’ve created! At the end of the month, review your actual expenses against what you budgeted. This will let you know where you did well and where you need to improve.
Planning for your future is important as well, and you should consider investing time in financial planning to account for potential life events such as marriage, children, buying a vehicle, buying a home, medical needs, and/or retirement as soon as you are able. Some of the many financial planning resources available are:
The information provided on this page is for informational purposes only. It should not be considered legal or financial advice. You should consult with a financial planner or other professional to determine what may be best for your individual needs.