How to Budget as a College Student

Putting together a budget is one of the most important skills you can develop as you transition out of your parents’ home and go to college.

With your budget, you have a way to keep your finances on track during college and build the foundation for a successful financial future. Here’s what you need to know about budgeting as a college student.

Start with your current situation

Look at your current financial situation, which includes your income and set expenses.

Income

Review your sources of income. While in college, they might include the following items:

• Scholarships and grants
• Stipends
• Jobs
• Parents
• Student loans

List all of your sources of income and how often you receive them. For example, you usually receive scholarships and loan money once a semester, while you might receive a monthly stipend for an internship or a weekly paycheck for your job. Get a feel for when the money comes in and how much you have. 

Expenses

Next, take a look at your expenses. As a college student, you’re likely to have the following costs:

• Tuition, fees and books
• Lodging (on campus, off campus or with your parents)
• Food
• Bills such as insurance and internet
• Entertainment
• Clothing
• Personal care items

Some expenses, including insurance, rent and tuition, are fixed. You can usually expect to pay the same amount regularly. Other expenses, including food and personal care items, might cost different amounts depending on how often you buy them and the amounts you choose.

Figure out where the money is going so you have an idea of where your financial resources are being used. You can also review the list of expenses and try to figure out where you might be able to cut back and save money. 

Use personal finance software

Personal finance software such as Mint, Personal Capital and EveryDollar can help you get an overview of where you stand. Connect your bank and credit card accounts, and you can quickly and easily see where your money is coming from and the major categories where you’re spending. That provides you with a bird’s-eye view of the situation so you know where you might need to make changes.

Create a monthly budget 

Once you know where you stand, it’s time to actually create a budget. Software such as YNAB and EveryDollar can help you assign your money jobs, including saving, that can help you get a better handle on your finances and plan ahead.

When creating your monthly budget, start with understanding your needs versus wants:

• Needs are required for surviving or for maintaining your status in school. For example, paying your tuition and making sure you cover your rent and insurance are needs. Food and clothing are also necessities.
• Wants are nice to have but not necessary. Extra treats such as eating out, buying more clothing than you need, entertainment and travel are examples of wants. 

Make sure your needs are covered. In many cases, as a college student, your tuition and fees are covered with your scholarship and loan money at the beginning of each semester. If there’s leftover money, you can include it in your monthly budget for things such as rent, insurance, groceries and utilities.

After accounting for all your needs, consider setting aside money for savings. Building a savings habit now, including creating an emergency fund, can be a good way to prepare for potential setbacks and build good habits. If there’s money left after that, you can use it for wants or to save up for large — but unneeded — purchases such as a vacation or a new game system.

Also consider using the 50/20/30 rule. With this approach, you try to keep your needs to 50% of your after-tax income, save 20% of your income and spend 30% of your income on wants.

Sample college student budget

Here’s an example of a college student budget that illustrates how you might plan:

Income

Expenses (fixed and needs)

As you can see, after you account for your monthly costs, you have $45 left each month. On the semester side, you have about $700 left after you use scholarship and loan money to cover those costs.

That provides you with some leeway for unplanned expenses. For example, you might be able to set aside money for an emergency fund to cover a car repair that crops up later. You might also need to get creative if you want more money for entertainment. A college budget can be tight, so looking for other ways to save or earn money can help you make the most of your situation.

For example, if you can get a job as a resident adviser in on-campus housing, that could cover your housing costs while providing you with a stipend. That helps you free up some money you would have spent on housing, and you might be able to maintain your part-time job and work-study commitment. Consider running the numbers for a campus meal plan. Depending on the situation, it might be cheaper than buying groceries, especially if you’re allowed a to-go box with each meal.

Another option — especially if you’ve reached your federal aid limit — is to look into low-rate private undergraduate student loans and graduate student loans through Juno. Use those funds for education-related expenses such as tuition, housing and needed equipment. That will free up your monthly income for other costs.

Bottom line

Getting in the habit of budgeting as a college student is a vital part of establishing good habits that will help you later in life. While it can be frustrating to scrimp and save during college, doing so can help you avoid debt later and put you ahead. 

The important thing is to be aware of your income and expenses. Know how much you have coming in and going out and the timing. Review your finances each month to make sure you’re on track and look for ways to save so you won’t go into debt during an emergency.