This online feature allows me to answer the questions I couldn’t get to during my weekly live chat. I’ll also respond to questions you send by e-mail (, Twitter (@SingletaryM) or Facebook (

Budgeting While Studying

Q: Hi Michelle, I am a college student trying to come up with a budget to use for the next school year. I have a job that gets paid by the hour, so my weekly income fluctuates somewhat. Because of this, I thought I would do my budget percentagewise: 10% for charity, 15% for spending, 15% for saving for short-term goals, and the remaining 60% for saving long term. At what point do I take out the money to pay my cellphone bill? Do I subtract that first, or does it come out of the leftover (long-term saving) money, or the immediate spending money, or what?

A: First, congratulations for doing what many older adults haven’t done, and that’s budget. Learn this habit now and this skill serve you well for the rest of your financial life.

Also, how wonderful that you put giving to charity at the top of you budget. I also put giving first. You often hear experts say “pay yourself first.” Although that is good advice. It means you should save first. But when you put giving last, after everything else is paid, often there isn’t any money left to give to those less fortunate.

In my opinion, here’s how you should order your budget – giving, saving (short-term and long-term) and then personal expenses. After giving, make sure to have a good emergency fund (at least a month’s worth of living expenses saved when you are started out). Ideally when you get out of college and begin working full time, aim for six months of expenses saved in your emergency fund. Then create a “life happens fund” for the things in life that happen. As a student, your “life happens” fund might be for such things as taking a spring break trip or helping to pay your expenses if you work an unpaid internship. Long-term, if you have the funds and you aren’t racking up student loan debt, you could actually start saving for retirement.

The allocations for your expenses come last. That’s where you factor in the expenses for such things as your cellphone bill. But keep in mind that if you don’t have enough for your expenses, after setting aside money for giving and your savings goals, you have to reduce your spending to make sure you are not living above your means.

Saving for the kids’ education

Q: We are aggressively saving in our college fund for our 8-year-old twins. However, every large dip in the market makes me sweat. I would like to just have cash buried in the back yard, but my husband prefers the market and long term potential. Help!

A: Keep listening to you husband — smart man. You can’t let your fear cost you money. Burying the money in the back yard actually means you will be losing money. How? Inflation. Your dollars today have to keep pace with inflation. And given what banks are paying on savings accounts and certificates of deposit, the stock market is the best way to try to grow your money. Bury the money, and you lose.

Paying off debt and boosting your credit score

Q: I am paying off the bulk of my debt very soon. My question is, will my credit improve immediately? I am not going to take on more debt, but I am going to start job- and apartment-hunting and am concerned they will do a credit check.

A: Your credit scores are constantly being updated, so every month that you move closer to getting out of debt means you credit history is improving. Will you scores jump sky high right away? Probably not. Be patient, however, because paying off bills and paying your bills on time will help lift your scores.

If your scores don’t increase fast enough as you start your new job or look for an apartment, explain to whoever is pulling your credit reports that you are working to address your credit issues.

You are welcome to e-mail comments and questions to Please include your name and hometown; your comments may be used in a future column or newsletter unless otherwise requested. Follow me on Twitter at @SingletaryM, or connect with me on Facebook at