Budgeting for College Students

Expert Interview: College Money Matters

Q. 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 they 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.

Q. 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 they expect 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.

Q. 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 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.

Q. 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 as a 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.

Q. 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.

Q. 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.

Q. 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:

• Choose 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.
• Enter college with course credits earned through high school or community college before enrolling as a freshman.
• Become an on-campus resident assistant, which comes with the opportunity to reduce housing costs.
• Consider employment opportunities that offer tuition reimbursement or waivers. Chipotle, for example, is one employer that offers this benefit.
• Obtain course credits by examination with CLEP that colleges accept as equivalent course credits.
• Transfer community college credits with the prior approval of the college or university.
• Apply for scholarships from outside organizations, in addition to those offered by the college, and continue to apply for scholarships every semester through graduation.
• Negotiate tuition breaks and inquire about unlisted scholarships at the college.

Q. 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.