I’ve gone to the ATM machine and been horrified to find how low my balance is. “Where did my money go,” I ask myself as I back away from the machine without making the planned withdrawal.

Or, I’ve gotten a credit card bill and found myself aghast at how much those late night pizzas and pre-class Starbucks total. I need to figure out how I got here – and help others avoid this path!

“Create a budget,” advises Michael L. Marvin, CFP(r), principal of TAM Financial Advisors in Annapolis, MD. “It’s all about making choices with your money, and the first step to making smart decisions is to know where it’s going each month.”

Many experts and parents emphasize the importance of budgeting. According to Cynthia A. Galarza, Associate Director of Student Financial Services at the Art Institute of California – Los Angeles, “Budgeting is the key element to managing the cost of your education.” Their financial aid office works with students and their families to manage the continually escalating cost of a degree.  

So, before classes even begin, you and your parents have to work out a plan for how to handle not just tuition but also room, board and trips home. And, you have to stick to the plan – no matter how much you crave a late night snack or … whatever.

Don’t create a budget that you know you can’t live with – it’s a waste of time. Build in a couple of splurges for yourself but limit them and don’t “just charge it” if you want an unbudgeted treat, even if you really do deserve it.  

If you’re just starting to deal with money matters, late is better than later. The first step is to talk.

Talk to your parents to find out what their money situation is and if they can still help with tuition and other expenses. Talk to your counselors about available jobs during the semester and whether you should consider taking a few courses over a summer so that you can finish up early. Talk to your financial aid office; start working with them now because as soon as you have your diploma, payment slips for college loans will start arriving in your mailbox. And, no matter what year of study you are in, credit card bills arrive.

Credit cards are dangerous. The Motley Fool (a great site to visit to about money without economic mumbo jumbo) lists some truly sobering statistics:

Eighty percent of college students carry a credit card. Fifty-four percent of freshmen have a credit card, and 92 percent of sophomores have one.

Among students with credit cards, 47 percent carry four or more cards.

Graduating seniors owe an average of $3,000 on their cards. More than 20 percent of undergraduates carry balances between $3,000 and $7,000.

Carry a balance on your credit card? No way! Your credit card is like cash; only spend what you know you can pay off at the end of the month. This will allow you to enjoy the convenience of plastic, build a credit profile for yourself and not hose you down the road.

While you may not want to think about marriage, kids, homeownership and all of the other stuff people tell us we’ll want, you should work to prepare your credit report for these events. And, a bad credit report follows you for a long time – as do bill collection services – and may prevent you from qualifying for some jobs.

Finally, you need to leave some room on your credit card for real emergencies that no one can budget for – or else they wouldn’t be called emergencies. Because we are in a credit crunch – banks have less cash in reserve so they don’t give customers as much credit – credit limits are lower. So, if you’ve used up too much of the room on your card for stuff that you haven’t paid off you may not be able to pay for a class, a book, an emergency Sudafed supply with the card.  

If money does buy happiness, make sure that you have some in the bank so that you can take advantage of the sale!