The best way to determine if projected resources will cover academic year expenses is to prepare a cash flow balance sheet containing monthly expenses and resources. You can then compare expenses with the resources and income you project will be available during the academic year.
- Begin by listing at the top of each column the months you are scheduled to attend school.
- Enter the exact amounts charged for tuition and fees in the appropriate column (month) when payment is to be made.
- Books & Supplies - List the required/recommended texts and instruments with appropriate charges. Talking with other students may give you a better estimate of probable expenses and help you determine at what time in the year it will be necessary to purchase the required books and equipment.
- Rent/Mortgage - Enter your monthly rent/mortgage charges. Do not forget to list deposits, escrow, and other charges.
- Utilities - Include the obvious: gas, electric, water, phone, cable, etc. Some utilities vary over the course of a year. To get a knowledgeable estimate of what you may pay, consult your landlord and/or past tenants as to their experience with prior charges, or request figures from the various utility companies.
- Food - Consider this area very carefully. Plan conservatively but realistically. Carefully review the amounts you normally spend for food - at the supermarket, restaurants and for snacks. Consider whether this amount can be adjusted before entering this budget item.
- Transportation - Include travel to and from school, vacations and weekly trips to and from the places you go. Also note car payments, insurance, upkeep, parking, etc.
- Health Care - Include the cost of student health insurance as well as unreimbursed visits to the physician and dentist plus the cost of prescriptions, etc.
- Personal/Other - This is a catch-all category. Sit down and do some brainstorming - laundry, clothing, debt repayment, entertaining, gifts, haircuts, health and beauty items, postage, etc. Try to develop a realistic estimate of monthly needs.
- Grand total - Total each month. You may wish to make grand totals by both row and column. Now look over the totals. Do they seem high, low, accurate?
- Parental Support - Such support may come in a variety of forms ranging from one lump sum to monthly allowances. Oftentimes parents provide assistance by covering such expenses as health or auto insurance.
- Student Wages/Income - This relates to both on and off-campus earnings. Place earnings in the appropriate monthly column on the basis of when monies will be earned.
- Spouse Wages/Income - Include your spouse's monthly net wages.
- Savings - Include any liquid assets. List total assets in the first month of the academic year. Do not provide figures for any other month at this time.
- Guaranteed Student Loan - List the amount of assistance your state provides.
- State/WICHE Contracts - List the amount of assistance your state provides.
- Institutional Financial Aid - Review your award letter. Place the disbursement amount of your National Direct Student Loan (NDSL) and/or Health Professionals Student Loan (HPSL) in the month expected.
- Other Resources - This is a catch-all area for any other income or resources you may receive.
CASH FLOW ANALYSIS AND NEED CALCULATIONS
Do not total the resource columns as you did with the expense columns. Instead, total the first month's expenses and subtract the sum from the first month's total resources. You should end up with a net positive balance (more resources than expenses). This net positive balance should be carried forward into the next month(s), probably in the form of increased savings. Continue this process until you either cover the entire academic year or end up with a net negative balance (expenses exceed resources). If a negative balance arises, continue to maintain the negative figure in the bottom net row. A negative balance is reduced or increased by the following month's balance. Continue the process until you reach the last month's net calculation.
The exercise of developing your budget and your net worth will also prepare you for developing similar financial statements for a future practice situation. Such statements are important in preparation to borrow money for a practice or a home.