New Year Financial Resolution: Saving to Go Back to School

New Year's is a perfect time to take stock of where you're at and the steps you need to take to reach your goals. Whether you're stuck in a dead-end job where you can't move up without more schooling, or you realize that you are just bored with the status quo, going back to school can offer the promise of a higher salary and more exciting work. By planning ahead to budget for the costs, you can avoid the common pitfall of finding yourself swimming in debt when you get out.

Pad Your Savings

Segregating Your Savings

Consider the Value of Going Back

Before you take the plunge, carefully consider your reasons for going back to school, to make sure it's going to be worth it financially. "Look at where current graduates are getting jobs," notes Wallin. "Ask about averages...not top of the class." If the value of going back isn't matching your anticipated costs, consider reducing the amount you need to save to go back to school by exploring other schooling options. For example, if you simply need to learn certain skills, consider taking Massively Open Online Courses. These courses are offered by many top-tier schools and are cheaper than traditional courses. Alternatively, a community college may give you the certifications or knowledge you need at a lower price than a private university.

Alternative Funding

Long-Term Budgeting to Guide Your Savings

To make sure you're saving the right amounts, you need to know how much you're going to need to cover your education expenses. Plan out your cash flow so you can make sure you can afford your rent, food and other necessities after paying school costs each semester, advises Wallin. School costs aren't limited to tuition; you also need to factor in the cost of books and supplies and transportation to and from campus.

Also, Wallin recommends checking the terms of any loans you have to take out, including when you're required to start making payments on the loan and whether they allow income-based repayment. Without income-based repayment, you might be making more after you finish your return to school, but your extra debt could mean you actually have less discretionary income to enjoy.