Student loans get so much press for making life hell, it’s easy to overlook the challenge of paying for the everyday living expenses that most college kids are facing for the first time. In fact, it’s these costs that are often the major obstacle to earning a college degree, according to a 2021 study by the Center of Urban Future. Millions are Americans are already racking up major debt in the form of student loans, and the last thing you want is to add credit card debt on top of that just to pay for your day to day.
Especially as a college student, managing your finances is an essential skill that can set the foundation for a successful financial future. Whether you’re receiving financial aid, working part-time, relying on parental support, or using up your savings, a well-structured budget can help you make the most of your resources. Here’s what you need to know to get started creating a college student budget.
How to make a budget as a college student
Here’s a step-by-step guide on how to set up a budget for the first time as a college student.
Gather your financial information
Before you start budgeting, gather all your financial information. This includes sources of income such as part-time job earnings, allowances, scholarships, and financial aid. Additionally, collect information on your fixed expenses like tuition, housing costs, and any recurring bills.
Calculate your income
Add up all the sources of income to determine your total monthly or semesterly income. This will give you a clear picture of the funds you have available to work with.
List your expenses
Make a comprehensive list of all your expenses. Categorize them into fixed expenses (those that stay relatively constant, like rent and utilities) and variable expenses (those that can fluctuate, like dining out or entertainment).
Common expense categories for college students might include:
- Tuition and fees
- Housing (rent, dormitory, or off-campus housing costs)
- Utilities (electricity, water, internet)
- Food (groceries and dining out)
- Transportation (public transit, gas, car maintenance)
- Books and supplies
- Health and insurance (healthcare, insurance premiums)
- Personal expenses (clothing, toiletries, entertainment)
- Savings and emergencies
Assign amounts to each category
For fixed expenses, the amounts will remain consistent each month. For variable expenses, estimate an average amount based on previous spending or reasonable expectations. Remember to account for occasional expenditures like buying textbooks at the beginning of the semester and birthday gifts for all the new friends you’ll meet.
Calculate your total expenses
Sum up all your expense categories to find your total monthly or semesterly expenses. This will give you a clear idea of how much money you need to cover all your necessities and commitments for the current period.
Subtract expenses from income
Subtract your total expenses from your total income. If you have a positive number, that means you have more income than expenses—a great start! If the result is negative, it indicates that you’re spending more than you’re earning, and you’ll need to reevaluate your spending and make adjustments.
Adjust and prioritize
If your expenses exceed your income, it’s time to make some adjustments. Look at your variable expenses and see where you can cut back. Prioritize essentials like tuition, housing, and groceries, and consider reducing discretionary spending.
Set savings goals
It’s important to allocate a portion of your income to savings and planning for emergencies. Aim to save a certain percentage of your income each month. This can serve as a safety net for unexpected expenses or for future goals like a spring break trip.
Use budgeting tools
Consider using budgeting apps or spreadsheets to track your income and expenses. These tools can help you visualize your budget, set spending limits for each category, and monitor your progress. For instance, check out these budgeting apps based on what kind of spender you are, or these apps based on your savings goals.
Review and adjust regularly
A budget isn’t set in stone. Life changes, and so might your financial situation. Regularly review your budget to ensure you’re staying on track. Make adjustments as necessary, especially if your income or expenses change significantly.
Setting up a budget as a college student might feel overwhelming at first, but the discipline and control you gain over your finances will pay off in the long run. A well-managed budget can reduce financial stress and set the stage for responsible money management throughout your life.
And hey, since you’re a student, consider turning your budget into a gorgeous spreadsheet.
