Only 41% of Americans actually use a budget. This lack of financial management can have devastating consequences; 40% of Americans can’t cover a $400 emergency, and many more cannot cover a more expensive disaster.
College is an especially important time to create a budget. In addition to normal living costs, college students must pay for expenses such as tuition, books, and fees. Many college students are managing their own finances for the first time. Poor money management can cause students to accumulate debt, which can hurt their credit score and make it even more challenging to save money.
College is an especially important time to create a budget.
Creating a budget presents several advantages. Budgets allow students to identify their expenses and determine available spending money. Budgeting can also help students save money for future emergencies, loan payments, or other financial goals.
This personal budget guide explains how to create a budget for college students. The page covers the basics of financial management, including essential budgeting terminology such as discretionary income. Students can learn how to assess their spending, categorize expenses, and determine spending money. Students can also find out about free budgeting apps, websites, and spreadsheets.
Track Your Spending
Track Your Spending
Assess Current Financial Spending
|Before creating a budget, students should first assess their current spending. Find a copy of your most recent financial statements, either from your bank account or credit union. Using these statements, make a list of everything you spend money on during an average month. Make sure you include the amount you usually spend on each expense.|
|After you have your list of monthly expenses, categorize items as either essentials or nonessentials. The essentials list usually includes fixed expenses such as rent or mortgage, car payments, insurance, tuition, and student loan payments. Essentials may also include some variable expenses such as utilities, transportation costs, and groceries. To budget for variable expenses, average what you spent over several months. Be sure to include education-related necessities such as books, internet, and class materials. Keep in mind that course fees can sometimes vary as well.|
Do the Math
|Next, students should calculate their discretionary income. Add up all of the items on the monthly essentials list. Now, take your monthly income, and subtract the cost of all monthly essentials. The amount that remains can pay for personal expenses and go into your savings accounts.|
Create your Budget
|With all of this information, students can finally determine how much money to spend on each expense each month. Your discretionary income can pay for splurges such as dining out and entertainment. If your discretionary income is negative, it means that you spend more money than you make in a month. This can be a problem for students who heavily rely on loans. In this case, you should adjust some essential expenses to fit within a monthly budget. Try meal planning, sticking to a grocery list, shopping for a new cell phone plan, renting textbooks instead of purchasing them, or finding a less expensive place to live. This page discusses more tips for cutting costs later on.|
|Students new to budgeting may consider the 50/20/30 rule. This rule encourages individuals to allocate 50% of their income to expenses, 20% to savings, and 30% to nonessentials or discretionary expenses. Students may face challenges sticking to this rule, especially on a limited income. However, 50/20/30 provides an excellent guideline for students just starting the budgeting process.|
Maintaining Your Budget
Students should regularly review their budgets. Essential expenses can change. Utility costs can increase, or a cell phone bill might cost more because of data usage. As for discretionary income, even small choices can add up. Buying a cup of coffee from the campus shop before class a few times a week can turn into a substantial amount over the course of a month. This can impact your budget, especially if trying to adhere to the 50/20/30 rule.
Crosswalk recommends frequently reviewing your budget. At minimum, you should assess your expenses once a month. If your monthly income changes at all, review the budget immediately and adjust where needed.
- Left to Spend While some budgeting apps can make college students feel overwhelmed, Left to Spend focuses on a simple daily allowance. Students take their discretionary income and divide it by the days in the month, which creates a daily budget. Users enter their spending and can see when their total allowance is running low.
- Microsoft Excel Spreadsheets can significantly help students assess their spending and categorize expenses. Spreadsheet formulas automatically calculate expenses or remaining funds. Students can use Microsoft Excel, Google Sheets, or other free budget spreadsheets.
- Mint One of the most useful budgeting apps for college students, Mint can help create budgets, track and pay bills, check credit scores, and even suggest changes based on spending. Students can manage their finances from anywhere through Mint’s tablet and phone apps.
- Personal Capital Personal Capital offers free financial tools and wealth management resources. Users can view all accounts collectively, understand saving and spending goals, and run various projections to determine if an unexpected expense could fall within their budget. Wealth management options include financial and investment advice.
- Simple.com Simple.com hosts mobile banking and a spending tracker. A safe-to-spend feature allows students to see what they can spend at the moment. This budgeting tool allows students to create financial goals and save a little each day. Users can also set up a separate emergency fund.
- Wally Wally, a free app without ads, can compare expenses and income, observe spending, and set short-term and long-term financial goals. When logging expenses, Wally also allows users to take a photo of their receipt for their financial records.
- YNAB You Need A Budget (YNAB) syncs to your bank accounts, provides tools to reduce debt, and helps users with goal-setting. Students can easily track their progress through YNAB’s pie charts and graphs. Users can access support through email and live workshops.
Adopt Healthy Spending Habits
Adopting healthy spending habits in college will benefit students for the rest of their lives. Several resources can help you cultivate healthy spending, including mobile apps. The Spending Tracker app tracks spending habits. Slice can send alerts when prices drop on potential purchases, and Habitica helps students build good habits by treating life like a game, complete with punishments and rewards. Using a credit card can help students start building credit for large purchases in the future. However, students should make sure to pay off their card each month to avoid interest and fees.
At-Home Meal Preparation
Meal prepping allows students to create a purposeful grocery list and save money by reducing waste. Rather than spending an average of $10 for lunch out every day, consider packing a lunch from home, which usually costs only $6.50 per meal. Meal planning apps such as MealPlan and MealBoard can help students get started. Students with the discretionary income to go out for a meal with friends can use the CheckPlease Lite app to calculate the tip and help split the bill.
Use Student Discounts
One of the best budgeting tips for college students is to take advantage of student discounts. Student discounts are available on hundreds of products, including school supplies from FedEx Office and Amazon, clothing from Topshop and J.Crew, and technology from the Apple store and Adobe. Even some fast food restaurants give discounts or free items to students. Additionally, consider looking into inexpensive and free activities on campus or through student organizations.
Find Cheap Textbooks
Textbook purchases can quickly add up, both in a semester and over the course of several years. Instead of buying brand new books for each course, consider purchasing used books or renting books from the library. You may also find cheap or free ebooks online or through sources like Amazon. StudentRate Textbooks can help you search for the best price on textbooks, as well as find coupons or promo codes. The FreeTextbooks app helps students locate textbooks, connects buyers and sellers, and provides students with free items like food and supplies.
Graduating from college early can save students money in several ways. Some colleges charge a flat rate for 12-18 semester credits. This flat tuition rate means that adding a class or two each semester won’t cost any extra. Graduating earlier also allows students to save money on room and board, fees, and other expenses. Fees are often charged each semester, so even one fewer semester can save hundreds of dollars. Finally, students who graduate earlier can begin earning a salary sooner.
- FAFSA.gov The Free Application for Federal Student Aid allows students to apply for federal financial aid such as grants, loans, and work-study opportunities.
- Federal Student Aid In addition to helpful information about the different types of student aid, this website also provides helpful tips for creating and managing a budget.
- Debt Payoff Planner This website, also available as an app, helps users manage their debt. Students may consider using this tool for their car payments, credit cards, and student loan debt.
- Selling Apps Several different apps can help students sell unwanted items, including books, clothes, appliances, and old cell phones. Some of these apps handle payments and shipping as well.
- Dealhack Students can use this website to save on useful sites such as Best Buy and Dell. The student discount guide features 160+ discounts, which the site verifies every three months.
- Find a Roommate Adding roommates can lower housing and utility costs, which is a major college expense. Many resources, including social media sites and apps, can help students find a roommate.