College Budgeting: A Guide for Students

By Dave Tomar and Dr. James Barham
Reviewed By Dr. James Barham

Published: May 20, 2022
Updated: Aug 28, 2023

Key Takeaways

Setting realistic financial goals based on current income and expenses is an essential skill for college students.
Developing healthy habits for spending money is a continuous process of improvement for most college students.
An effective college student budget can help to gain insight into spending and develop better financial habits going forward.

Table of Contents

For many young adults, college is a time of great freedom. With that freedom, though, comes a large dose of adult responsibility. Money is one of those responsibilities that can be handled either responsibly or irresponsibly—and in either case, there will be consequences.

Keep in mind that the decisions made while in college will have a long-lasting impact. If you sign up for credit cards and run up credit card debt, have a large amount of student loan debt, mismanage your finances, and fail to plan for the future, you will be haunted by your financial mistakes for many years. Fortunately, it can be easy adopting good money management habits and maintaining them for the rest of your life!

In this college budgeting guide for students, we will take a look into the healthy financial habits, money management skills, and money saving strategies that every college student should know.

Understanding Your Income and Expenses

Students have a specific college student budget that reflects their unique income and expenses situation. You may come from a low-income family, for example, so your college budget will be different from a college student with a fat bank account or checking account. Your monthly budget will likely contain less number of actual expenses and at lower amounts, too.

The very first step for college students and their families is understanding the various expenses in the student’s life. Ask yourself:

How much are your tuition and fees for the term?
What does your financial aid package cover and what do you need to pay for (i.e., out-of-pocket costs)?
What are your loan payments (e.g., interest payments on student loan debt)?
Are you responsible for paying for all books and course materials?
Will you be living at home, in a dorm, or in your own apartment?
Will you be mostly eating on campus or will you cook your meals?
What about your transportation arrangements (i.e., car-related maintenance costs or commute)?

Next, list your expenses in two columns—fixed expenses that remain constant (e.g., tuition and fees, rent and car insurance) and variable expenses that change (e.g., price of groceries and transportation costs).

Once you understand the amount of money needed for fixed and variable expenses, look at the money coming into your hands (i.e., income). This comes in many forms, too, including but not limited to:

After-school and summer jobs, among other sources of employment
Financial aid for living expenses
Financial support from family and friends

With this information, you can use this simple math equation: Monthly income less fixed expenses equals money left for essential variable expenses, optional expenses, and emergency fund for unexpected expenses. Extra money will always be appreciated among college students regardless of their current financial situation.

Once you understand the hows and whys of your income and expenses, you will have a better appreciation of the budgeting tips that we’re suggesting in a later section. You can also set realistic financial goals based on your current and target income and expenses.

In your college budgeting exploration, you may want to consider the cost of online college vs. an on-campus experience. Our guide compares both education options.

And since budgeting is a top priority for you, make sure that you get the Best Return on Investment (ROI) From College.

college student working through college budgeting

Setting Up Your College Budget

Nowadays, college students have access to a wide range of budgeting apps that allow them to keep close track of their income and expenses on a daily, weekly, and monthly basis! Many of these digital tools are also free, easy to use, and even provide budgeting tips that college students can follow.

There are a few different ways to track expenses. One way is to use an app. Some bank apps offer the ability to track money spent by category. Other services, like Intuit’s Mint, sync with credit cards and bank accounts to track all money spent.

There are also apps that offer both budgeting and tracking capabilities. You Need a Budget (YNAB) is one, and it’s free for college students. Tracking expenses is vital to make sure that the budget is being followed.

The bottom line: There’s no excuse for not setting a realistic budget that you can adopt and maintain even when you’re in a tight spot! Here are more tips in setting up your college budget.

Be honest and realistic about your income and expenses, spending habits, and goals. Better yet, adopt the SMART approach in setting financial goals. Neither underestimate your expenses nor overestimate your ability for saving money!
Identify other education-related expenses that are unnecessary, can be cut back, or can be subsidized. Identify other possible sources of income, such as tutoring fellow students or working in on-campus or off-campus jobs, in addition to your current income sources.
Prioritize money for essential expenses first including meeting your basic needs (e.g., food, rent and utilities, and gas) and compulsory course materials (e.g., books and technology requirements).
Allocate money for discretionary expenses, including entertainment and shopping. Setting a limit on discretionary expenses is a must to stay within your college budget.
Set aside part of your income for an emergency fund for unexpected expenses and for a savings account.

As already mentioned, you can either use digital tools, such as a budgeting app or even Microsoft Excel, or write down your budget on a notebook and update manually. The important thing is you start budgeting and improve on your budgeting skills over time.

It’s no secret that the cost of a college education has skyrocketed over the decades, but most people do not know just how much. We take a deep dive into the data and what these figures mean for students today.

college students sitting outside together

Tracking Your Spending

College students should not stop with setting up a budget. Instead, by regularly monitoring your expenses by writing them down, will contribute to your ability to stick to your college student budget.

When you track your spending, you can increase your awareness of your financial habits and the areas where you can improve. You can compare your budget and actual expenses, identify the discrepancies and overspending, and make the right adjustments. This will help you to determine whether you’re staying on track.

Again, you can use digital tools that can be linked to your personal computer or smartphone, even to your bank accounts, as well as classify transactions and generate regular reports. Be sure to set a regular schedule for reviewing and updating your spending records, as well as recording every expense regardless of its amount. Even seemingly small purchases, such as to-go coffee, will add up over time.

Developing Healthy Financial Habits

Setting a budget and tracking how you spend your money will only be effective toward achieving your goals if and when you have healthy financial habits!

Tracking your spending will increase your mindfulness and awareness of your purchases. The more mindful you are about your purchases, the less likely you will cave in to impulsive purchases and the more likely you will make thoughtful spending decisions and ultimately, increases your chances to save money!

Don’t be frustrated if your first budget in college doesn’t go as planned! Developing healthy habits for spending is a continuous process of improvement for most college students, particularly if you’re a newbie. Use the insights gained to develop better financial habits and move forward.

Here are more effective tips in developing healthy financial habits over time.

Whenever possible, engage in comparative shopping, particularly for items with higher prices. Use online platforms to make the task easier.
Buy at thrift shops, exchange or barter with your fellow students and other individuals, and buy second-hand items since these usually have lower prices than the original items.
Take advantage of student discounts, cashback offers, and coupons, among other ways of getting reduced prices as a way to save money on your desired products and services. Many businesses offer student discounts.
Adopt a savings mindset. Think about the opportunity cost for every product or service you spend money on, meaning the dollars spent can be used to meet your financial goals instead.
Practice delayed gratification. Think about the pleasures that you will enjoy because you avoided an impulsive purchase of an unnecessary item.

When you’re tempted to veer away from your budget by telling yourself that it’s just a small purchase, you should think that the small changes in your daily spending habits will result in substantial savings over time.

Tips for College Students to Take Action Toward Effective College Budgeting

Let’s take a closer look at the income and expenses in your budget and the ways you can achieve your financial goals in these specifics.

Consider side hustles or part-time jobs for extra money. On-campus jobs, remote work, and freelancing gigs, such as tutoring assistance, are great ideas, alongside off-campus jobs in local businesses.
Look for the best possible financial assistance package for your needs. Ask for assistance from financial aid and admissions officers—even a certified financial planner—regarding the financial aid options available. Prioritize high-value scholarship and grant opportunities, but don’t be afraid to consider small scholarships, too, since they will add up.
Save surplus income, whether it comes from financial aid, student discounts, employment, or support from family and friends—or better yet, invest it in low-risk investment options as part of your emergency and savings fund.
Consider shared accommodations, whether you’re living in on-campus or off-campus accommodations. Short-term rentals, subletting, and co-living community arrangements are also effective ways to save money on your college accommodations.

Negotiate rent. Use rental incentives for students. Choose energy-efficient accommodations and appliances to save on utilities expenses.

Living closer to campus or living on campus can result in savings on transportation costs. Bike and walk to your college, if you must. But you must consider your other education-related costs, too, since every college student has their own financial situation.
Consider your expenses on school supplies and learning materials and determine which areas you can save money on. Buying used textbooks, renting books, and borrowing books and ebooks from the library are great cost-saving ideas.

Use the campus libraries and their resources as well as open educational resources. Buy school supplies in bulk, if necessary, and use student privileges and online deals.

Plan your meals and cook them in your own kitchen to save on costs, too.

In the end, saving money and preparing for the future starts today! Take the first step in creating your college budget and follow through—it will work to your benefit soon enough.

alarm clock with a graduation cap sitting on top and coins stacked around it

For further information on college budgeting, check out these resources.

See our Complete Guide to the College Admissions Process for more.

Or jump to our student resource library for tips on everything from studying to starting on your career path.

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