Budgeting 101 for college students

A female sitting on the ground, holding paper while using a laptop.

College is expensive, whether you’re paying for it or living it. That’s why it’s a good idea to create a budget and keep an eye on where your money goes. But where do you begin? We have some tips to help you start, manage and stay on track with a budget.

Prepare for your budget

  • Think about your saving and spending goals. Would you like to spend a semester studying in Europe? Are you determined to not take on any extra student loan debt? Or do you just want to be sure you can afford to go out with your friends on the weekend? Now’s the time to jot your goals down, so you can have them in mind as you start to work on your budget.

  • Involve your family in the process. Have an honest conversation to determine how much, if anything, they’ll contribute and what they’re willing to pay for. And clarify who makes the financial decisions—them or you. Also, find out whether there are any conditions for the assistance, such as maintaining a certain GPA.

  • Gather and record all sources of total and monthly income. Include pay from a part-time/summer job, work-study program, family contributions, student loans, grants and other financial aid, and any savings or checking accounts you’ll be drawing from. Review any scholarships or grants you’re using to make sure there are no limitations on how you can spend the funds.

  • Gather and record all expenses. Include tuition and other school-related expenses; rent and utilities; groceries, snacks or meals outside your campus meal plan; bus fare or ride-share services; car insurance, maintenance, gas and parking (if applicable); cell phone charges, internet, cable/streaming services; laundry and new clothing; membership fees; travel; and “fun money” (anything to do with entertainment). Include an “unexpected” category for things you can’t plan for, like car trouble or medical expenses, and an “emergency fund” category to help pay for unexpected expenses as they arise.

Calculate your budget

  • If you need a guideline to start, many budgeters use something known as the 50/30/20 rule: 50% of your after-tax income to needs, 30% toward wants, and 20% to savings and your other financial goals.

  • Determine which expenses are needs (tuition, textbooks, rent, groceries, loan payments, transportation), and which are wants (gym membership, meals out, entertainment, travel).

  • Use a spreadsheet (Excel or Google Sheets) or a budgeting app. Your credit union or bank may also have budgeting tools available with their online banking services.

  • Calculate your income (minus anything taken out for taxes), then add up all your monthly expenses. Subtract that number from your monthly income. If the result is positive, you can put money toward your savings and emergency funds first, then have extra money to spend. If it’s negative, you’re spending more than you bring in each month, and you’ll have to make some choices about your “want” expenses.

Manage your budget

  • Once you’ve created the budget, it’s important to stick to it. Track your spending on a daily basis with a budgeting app or spreadsheet.

  • As you start to see the patterns in your spending habits, re-allocate funds as needed. You’ll probably want to review your budget weekly at first, but as you get more experience, you should be able to do it on a monthly basis.

  • Look at everything you’ve noted as a need. You may find less expensive alternatives or even extra money if you:

-  Cook your meals or brew your coffee at home

-  Buy or rent used textbooks instead of new

-  Take advantage of student discounts

-  Take advantage of free activities around campus instead of paying for another movie or concert

-  Take on a part-time job or side hustle if your schedule allows

For more information about budgeting in college, visit the U.S. Department of Education website (studentaid.gov/resources/prepare-for-college/students/budgeting). 

Your budget will help you pay off debt and create healthy financial habits that will stay with you long after college, as you work toward bigger goals—paying off student loans, saving money for a car or a home, or taking the dream trip of a lifetime.