Budgeting for College Students

Tips, Tricks and Guidance for Managing Money While in School

Budgeting as a student is an essential component of making college affordable, but far too often students don’t have the tools needed to succeed. A 2016 study found that 43 percent of students don’t track their spending while 58 percent said they aren’t saving money each month. Based on these figures, it should come as no surprise that a separate study found 7 out of 10 students are stressed about their finances.

Managing money and setting budgetary goals may seem like the last things you want to do at the end of a busy day filled with classes, group projects and exams, but developing good habits early is worth the effort. The following guide will show why students need budgets, provide a list of common expenses, offer expert tips and include a list of helpful apps and websites designed to make the process seamless.

Why You Need a Budget

What with submitting assignments, completing required internship hours, playing on the intramural sports team and spending late nights with friends, setting aside time to create and maintain a budget may seem like a big ask. According to data collected by EverFi and Higher One, college students’ interest in following a budget, limiting spending and investing income into savings has steadily dropped in recent years. In fact, the number of those who follow budgets dropped by more than 10 percent between 2012 and 2014. While budgeting takes time — a valuable commodity in college — it’s worth it. Students who observe financial spending limits and savings goals early on not only worry less about money, but they also have nest eggs available when graduating and starting out in their adult lives.

The best piece of advice for figuring out the components of a budget is to keep it simple. While many adults use an annual budget system, students often find it easier to work from a semester model. Whether you receive money from a parent/guardian or have a job, consider how much money you typically receive during a semester. Divide that amount by the length of your semester to get a sense of how much money you can spend each month.

According to financial behaviorist Syble Solomon, many students run into budget issues when they begin making decisions based on emotions in the moment. “Students need to think through the ‘what if’ questions and be prepared for situations when they will spend money without thinking,” she says. “What if your friends are going to a concert where tickets cost $100 and you hadn’t planned on that expense? What if your friends are planning an amazing spring break that is way more than you planned to spend? By being aware that things like this will pop up from time to time, you can be better prepared and not throw your budget out of order.”

Some expenses are fixed, while others fluctuate from month to month. By setting a budget for things like eating out, clothes and travel, students avoid running out of money before the semester ends and can save for things like spring fall break or any emergency expenses.

The next step is to find a website or app to manage your budget. Many free tools exist that automatically import debit/credit card statements and categorize them into various types of expenses. By tracking this information, students gain a sense of where they need to cut back and places where they can save money.

College Expenses to Expect

Determining what your expenses will be is a valuable step for any budget, and students are likely to have several fixed and variable expenses each month. When creating a budget, it’s important to consider which (if any) expenses are covered by a parent or guardian and subtract those from your monthly expenses. Following are common expenses students may expect to be responsible for:

Example of a College Student’s Budget

Expenses for college students vary significantly based on where they’re enrolled, how much their institutions cost, whether they receive money from parents or guardians and whether they have solid budgets in place to rein in their spending. Some monthly costs — such as housing, transportation, utilities and groceries — are unavoidable, while others — such as entertainment, travel or trips to the mall — are more about wants than needs. By finding a balance between needs and wants, students can enjoy a happy medium that allows them to spend time with friends and have fun without blowing their budgets.

To help college students better understand the expenses they are likely to incur while in school, the College Board provides an annual living expenses budget according to a national average as well as for specific regions of the country in which students may be enrolled. For the 2018-2019 academic year, students who plan to spend moderately will need $24,980 per year while those who plan to maintain low, restricted budgets should expect expenses to total $16,730. The following budget includes common student expenses divided into a 12-month payment schedule, based on combined figures from College Board and the U.S. Department of Education.

Top 10 Tips for Saving Money in College

Establishing healthy financial habits in college is good practice for life as a working adult, and there are lots of ways for students to cut costs while in college. Check out some of our top tips below.

• Buy used textbooks. A single new textbook can cost several hundred dollars, but often these items can be purchased used through such outlets as Amazon, AbeBooks or the on-campus bookstore. When purchasing used textbooks — especially in subjects such as science, social sciences or math — pay close attention to the edition and publication date, as an older edition may contain completely different information from the one specified by your professor.
• Purchase a coffeemaker. Those early morning lattes and late-night espressos can really add up over time. Studies have found that college students spend nearly $1,100 per year on coffee. Instead of making a beeline to the nearest coffee shop, consider the one-time expense of purchasing a coffeemaker for your dorm or apartment to cut back on those regular costs.
• Take advantage of free food. In addition to the myriad on-campus events that happen all the time and provide free food and beverages, students may also consider working part-time at restaurants. In addition to standard wages and tips, many restaurants provide free meals to their employees.
• Take advantage of student discounts. Hundreds of companies offer discounts especially for students, and many of them are significant. In addition to clothing stores such as J. Crew and Gap that offer discounts, Amazon Prime offers a free six-month membership, and technology companies including Apple and Dell provide percentages off for students with official school email addresses.
• Stay on your parents’ insurance. Thanks to special mandates under the Affordable Care Act, students are allowed to stay on their parents’ or guardians’ insurance plans until age 26. This also can help with getting discounted prescriptions and low- or no-cost visits to the doctor.
• Be strategic at the grocery store. It may seem silly, but there’s truth to the advice about never going to the grocery store while hungry. It’s easy to throw random things into a cart, but those little splurges can easily add up. In addition to shopping the sales, try to buy store-brand items when possible, and don’t forget to check the clearance bins.
• Sell items you don’t need. Aside from selling old textbooks on sites like Amazon, eBay and AbeBooks, websites such as Poshmark and ThredUp also allow students to clean out their closets and make a profit. When getting rid of old furniture, technology, automobiles or household items, consider using sites such as Craigslist.
• Cancel memberships. Rather than paying for Apple Music or Spotify Premium, use services like Pandora or the free version of Spotify. Instead of having your own memberships for streaming services such as Netflix, Hulu, Prime TV or HBO Go, consider sharing a single membership with friends and/or family.
• Take care with credit. If you feel it’s necessary to have a credit card in college, be sure to get one that has no annual fee and the lowest interest rate available. Always make the payment on time (automatic payments are great for this) to avoid penalties or fees.
• Limit spending on alcohol. Did you know that college students spend $5.5 billion on alcohol each year? If you’re a college student who enjoys drinking responsibly, find out when happy hours take place around campus or consider arranging a house party or game night so you don’t spend tons of money at a bar.

Looking for More Money Tips?

Check out the following guidebooks:

• 13 WAYS TO SURVIVE COLLEGE ON $5 A DAY
• 67 BEST MONEY-SAVING HACKS FOR COLLEGE STUDENTS
• DISCOUNTS AND DEALS FOR COLLEGE STUDENTS
• HOW THE SHARING ECONOMY HELPS COLLEGE STUDENTS SAVE
• HOW TO FIND AFFORDABLE OFF-CAMPUS HOUSING
• THE ULTIMATE LIST OF COLLEGE COST CALCULATORS

Expert Q&A: College Money Matters

Melisa Boutin

Certified Financial Education Instructor, Your Money Worth

Melisa Boutin is a Certified Financial Education Instructor (CFEI), a student loan expert, and founder/author of YourMoneyWorth.com, a website providing personal finance resources to help millennials in the United States and the Caribbean region get rid of debt and build positive net worth.

What are some common misconceptions college students — and even adults — have about budgeting?

Both adults and college students mistakenly think they can rely on the costs of attendance provided by colleges as accurate estimates of students’ miscellaneous and personal expenses. Expenses that a college student might incur can exceed those estimates, so it’s important for families and students to create their own budgets. Another misconception about budgeting is that a written budget is not necessary for a college student, as he or she will have little or no variable income. In fact, budgeting is an essential skill that everyone can learn and master, even with a variable income.

Debts usually come into the picture when students enter college. What should students keep in mind about accumulating and managing debt, especially student loan and credit card debt?

Students should aim to minimize the amount of student loan debt they take on to fund their college educations. When it comes to student loan debt, a student should limit the total amount of borrowing to no more than the starting salary he or she expects to earn after graduation. For example, a student who expects to earn a starting salary of $27,000 after graduation should not borrow beyond that amount for college. Applying this rule of thumb can help students avoid the burden of unaffordable student loan debt payments.

In the case of credit cards, students should avoid carrying balances and get into the habit of spending only what they can pay off every month. If using credit cards will result in debt they can’t afford to repay in full, however, students should avoid them altogether.

Having conversations about money with parents/guardians can be challenging. How can students work to keep an open line of communication when it comes to finances?

Students can initiate conversations about money from the angle of managing college costs, and use that as an opportunity to have ongoing conversations about money with their families. They can consider establishing a schedule of a check-ins about their finances with their families at the end of each semester and during each school break. By approaching it from a mature, practical standpoint, this way of communicating about finances can become routine.

Some students need to work in college to get by. What advice do you have for those who need to balance academia with earning an income?

Students who need to work while taking college classes should explore work opportunities that allow them the time they need to dedicate to their course loads. They should consider earning money in flexible positions such as brand ambassadors (people hired to represent company or product brands in a positive light), street teams (people who hit the streets to promote events or products) or delivery person working with apps such as UberEats that allow students to work flexible schedules. Saving money from paid internships or summer employment is another way students can balance school and work. They can ramp up work hours during school breaks and scale back when they’re back on campus.

Amid tough classes and assignments, keeping a budget can seem arduous. What are some quick ways that students can keep an eye on their finances and ensure they don’t overspend?

Setting up calendar reminders to do routine financial check-ins is one way college students can steer clear of overspending. Another way is using a spending account and debit card like Chime, whose mobile app sends automatic alerts of transactions and account balances. These options make staying informed about your finances as simple as reviewing alerts on a smartphone.

Are there administrators on campus who can help students with budgeting? Where might they be found?

Financial education resources can be found at many colleges via the student affairs portal, as is the case at Wright State University. Another popular option is in-person financial wellness counseling services, such as those offered at University of Minnesota. Students should check with their student affairs department on campus to explore the financial education and support services available to them.

What are some ways that college students can cut their expenses?

College students cut their costs of attendance by focusing on ways to save on major costs. Some areas to consider include:

• Choosing an accelerated completion schedule. For example, a student can choose to take on a fuller course load and take classes during the summer to finish college in three years.
• Entering college with course credits earned through high school or community college before enrolling as a freshman.
• Becoming an on-campus resident assistant, which comes with the opportunity to reduce housing costs.
• Considering employment opportunities that offer tuition reimbursement or waivers (Chipotle is one employer that offers this benefit).
• Obtaining course credits by examination with CLEP that are accepted by the college as equivalent course credits.
• Transferring community college credits with the prior approval of the college or university.
• Applying for scholarships from outside organizations, in addition to those offered by the college, and continuing to apply for scholarships every semester through graduation.
• Negotiating tuition breaks and inquiring about unlisted scholarships at the college.

What are your favorite apps/websites on this topic that students might find useful?

My favorite budgeting app is Mint, as it aggregates all your transactions, allows for manual entries and tracks your spending against different budget categories and limits. As far as websites go, CentSai Adulting is a good personal finance resource for college students.

Additional Resources

Looking for more information on becoming a budget master as a college student? The resources below are a great place to start.

• 7 Easy Ways to Build an Emergency Fund in College:Unexpected expenses are a fact of life, but this article by Elyssa Kirkham on Student Loan Hero offers advice to help students be better prepared.
• Mint Bills: This website and mobile app (formerly called Pageonce and then Check) functions as a comprehensive budgeting tool that connects to a student’s financial accounts and cuts down on time spent managing money. It also provides a handy monthly reminder when individual bills are due.
• The Best Bank Accounts for College Students: Read this Forbes article by Rob Berger to learn about the pros and cons of different checking/savings accounts and to take advantage of free accounts available specifically to college students.
• College Budgeting: How to Save Money in College:Debt.org offers this helpful guide for students looking to cut costs and stick to a budget while in school.
• Federal Student Aid tips for creating and managing your budget: The U.S. Department of Education’s Federal Student Aid Office provides this handy overview of steps students should take when setting up a budget.
• Pocket Budget: A great app (iOSand Android) for students who are more visually inclined, Pocket Budget is a pared-down app that shows a visual representation of the different areas in which money is spent on a pie chart.
• Why Even “Broke” College Students Should Be Saving for Retirement: Time magazine shares this fascinating perspective from writer Zina Kumok about the importance of saving from an early age.
• The 10 Habits You Develop in College That Will Save You Money in the Real World:Wondering how you can become a smart spender and great saver while still in school? This Forbes article by Maggie McGrath has the answer.
• Free Budgeting Templates:California College San Diego shares these helpful, free budget templates for all students looking to get a handle on their finances.
• How to Make, Spend and Save Money in College — While Still Having Fun: MarketWatch offers this great reminder that it’s possible to be a cost-conscious student while still enjoying the experience.
• Toshl Finance: This free and easy-to-use budgeting app makes it possible for students to set strict budget goals and determine whether they are saving or going over their spending limits.