Managing money is important for college students. Check out these twenty college budgeting tips to help set up a college spending budget that could save hundreds of dollars.
1. Set a realistic budget for college
A realistic budget for college students involves tracking how much you spend and then cutting costs. Use a college budget planner or college budget calculator to learn things to include in a college budget and track how you spend money.
A college budget includes required spending, optional spending, and transportation costs. Required spending includes:
- Tuition and fees
- Books and supplies
- Personal expenses
- Transportation costs
Personal expenses include NEEDS like:
- Utilities including cell phone and internet
Everything else is a WANT, including:
- Cable/streaming services
Transportation costs include:
- Traveling home on breaks
- Licensing fees
- Parking fees
If you are budgeting for a college student living at home, you may not have as many personal expenses.
Some amounts are fixed or remain the same every month. These are housing, tuition and fees, insurance, and some utilities. Variable expenses change monthly. Prioritize fixed expenses. Find ways to decrease fixed expenses costs. Can you add roommates to the lease? Look for cheaper phone plans or internet plans.
Find ways to decrease variable expenses and wants, especially if you are budgeting as an off-campus student. How can you decrease those expenses? Reduce utility costs by turning off the lights, turning down the heat or up the air conditioning and using sweaters or fans.
2. Track spending
Your budgeting worksheet for college students includes all expenditures in cash, debit card, or credit card. Write down all spending and cut out impulse purchases and daily coffees, etc. Track expenses and add them weekly to your monthly college student budget. Adjust your college budget each month. Your goal is to have money at the end of each month. Use a budgeting app like Mint to help track spending. Interface it with your bank and enter cash expenditures. It will also populate a budget and alert you when you go over budget.
3. Get bank accounts
Set up three bank accounts at home or college. The first is a checking account dedicated to wants and the second checking account is for needs. The final is a savings account. An alternative would be one for living expenses, one for educational expenses, and a savings account. Link all three to your budgeting app.
Set up direct deposit into each account. An average monthly budget for a college student will indicate how much money you need to cover expenses. Remember to transfer money into your savings account at the end of each month.
4. Financial aid and loans
Your goal is to take out the fewest possible student loans. Use them only for tuition and fees and other qualified expenses. Use a budget planner for college students to help you decide how much you need.
Whether you, your parents, or a spouse are paying for college, know how much each is paying and if you must repay them. Keep track of expenses and claim tax breaks for education. Talk to a certified tax professional for more advice.
If you or your parents have a 529 plan for educational expenses, you must track expenses.
You’ll need all this information to fill out the FASFA (Free Application for Federal Student Aid). This must be filled out annually. It indicates eligibility for federal loans, grants and work-study. Colleges may also use the information to determine scholarship eligibility.
5. Credit cards
Credit cards are necessary but are one of the three biggest sources of American debt. Look into a secured credit card. These have a savings account securing them. Your credit limit is the cash backing. Use credit cards ONLY for emergencies. If you get an unsecured card, you may need to have a parent co-sign. This means if you default on your payments, your parent is responsible and both your credit scores can be ruined.
6. Part time job/Work study
If you qualify for work-study you get some tax benefits. FICA deductions are not removed and you may get other deductions. If you work a “regular” job, you are subject to standard requirements for paying taxes and filing. Use this money to live off, not your student loans if at all possible.
7. Live below your means
Live below your means. This is the most important budgeting strategy for college students. Spend no more than you earn. Better yet, spend less than you earn and bank the rest. You may need to cut expenses to the bone but if that means that you graduate with minimal student loans, your future self will thank you.
8. Save money
As you live within your means, set aside money for emergencies and for future loan payments. Set up a coin jar, and find ways to make extra money in gig employment. Put all that money aside if possible.
9. Remove unnecessary expenses
What should a college student do with their money? Spend as little as possible! Remove as much as possible from expenditures. The average cost of coffee is $3.33. One coffee a day is over $1000 a year. Imagine taking out $1000 a year less in student loans.
10. Don’t overcommit to activities and clubs
College is filled with opportunities. Choose wisely. Overcommitting to activities and clubs costs both money and time. Pick one or two a year. Better yet, sign up for one PE class a semester.
11. Plan a budget with the future in mind
A typical college student budget involves the future. Create an emergency fund for true emergencies. Your initial goal is $1000 with a final goal of three to four months of expenses. Once you reach that goal, start a student loan repayment savings account. Private and federal unsubsidized student loans accrue interest immediately. Pay down private loans immediately and federal loans as soon as possible.
12. Buy used textbooks and sell old ones
Avoid the college bookstore when buying books. College textbooks are expensive. Purchasing or renting them from sites like Chegg and Valore saves hundreds. Resell textbooks. The odds that you will need them again are vanishingly small.
13. Find free or low cost entertainment options instead of going out every weekend
Alcohol is expensive as is going out every weekend. Since most of your friends are in the same financial boat, organize low cost entertainment, like game nights, and take advantage of the free or low-cost entertainment at college.
14. Avoid automated subscription services
Avoid automated subscription services as costs add up quickly. Most subscription services fall in the wants category of a college budget and should be discontinued in college. Check your phone bill for similar services, like insurance on an older phone and drop that as well.
15. Weigh costs and benefits of on and off campus housing
Consider housing costs. It may be cheaper to live off-campus. There are pros and cons to each housing arraignment. On-campus housing is only for the school year, allowing you to take employment out-of-town to enhance future career goals.
16. Cook at home rather than eating out
Eating out is expensive. An average fast food meal costs between $5 and $7, the average home cooked meal averages between $1.50 and $3. One meal out a day costs between $1,800 and $2,500 a year. Eating at home averages between $550 and $1,000. Set up a food budget for college students that includes eating out once a month or less.
17. Pay with cash whenever possible
Look at how you spend money. If you burn through cash, carry less. If you overuse debit cards, put them at the bottom of your backpack or somewhere hard to get. Know when and how you spend money and decrease the temptation.
18. Use coupons
Many college town stores offer college student discounts, so always ask. Sign up for digital coupons and check circulars at local stores before shopping. Save money by shopping mindfully and setting up a college student food budget.
19. Avoid convincing yourself that things are cheap and it’s ok to buy
Ask if you need to spend money even on cheap items, and then wait 24 hours before purchasing. Impulse purchases really add up. Cheap is not a good reason to spend money!
20. Start paying on student loans before graduatation
Private and unsubsidized loans accrue interest immediately. Live under your means and pay off student loans with the saved money. The less you take out, the faster you pay them off. This means strictly managing money in college.
University students can learn to manage their money through budgeting. Know what you are spending and then find ways to cut costs. Your end goal is to graduate with the least amount of debt possible.
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