6 Budgeting Tips for College Students

6 Tips for Budgeting Your Money in College ImageManaging your money in college can be challenging. Plus, being financially independent for the first time can make it difficult to turn down exciting new opportunities. But with newfound freedom comes the responsibility of keeping track of your personal finances. Whether you're paying for your own college expenses or have financially supportive parents, these budgeting tips will help you make informed financial decisions and avoid running out of cash during your freshman year.

 

1. Create a realistic budget before you leave for college

Once you arrive on campus, creating a budget will likely be the last thing on your mind. That’s why it’s essential to have a realistic spending plan in place before the school year begins. Yet, it's hard to know what your spending habits will be until you have lived the life of a college student. You can use the college's cost of attendance as a guide to estimate your expenses. A free budgeting app, college budget template, or Excel spreadsheet can help organize your budget into the following sections:

  • Monthly income

The money you make in college can come from a variety of sources. Your income might come from a part-time job, contributions from parents, personal savings, scholarships, grants, or loans. Colleges usually disperse your financial aid money for tuition and fees then send the rest directly to you. It’s important to budget this excess money over the course of the semester to cover your college expenses.

  • Required spending

When calculating your budget for college, it's important to start with your required expenses. These costs include fixed expenses such as your rent, room and board, cell phone bill, and prescriptions. However, you should also account for the costs that change from month to month, such as textbooks, groceries, and laundry.

  • Optional spending

Once you’ve subtracted both fixed and variable expenses from your budget, the remaining money can be allocated to your wants. Life’s too short to just go to class and pay your bills. Try to allocate room in your budget for extra activities, like eating out, going to the movies, attending concerts, traveling, or gaming. These optional expenses  are not mandatory but can make both college and budgeting a little more fun. 

 

2. Budget for saving, surprises, and splurges

Your budget is also a tool that can help you save money. You may be wondering, how much should a college student save per month? While there is no set dollar amount, consistent, sustainable savings seem to work the best. To get started, create a budget category for savings. Then, you can contribute a certain dollar amount or percentage of your income each month. The money you save could be used for an emergency fund, retirement fund, student loan, or other long-term financial goal. 

Although financial emergencies do happen, you can anticipate these costs by leaving a little extra room in your budget. At any time you may lose your job unexpectedly, a loved one can become ill, or your car could break down. Not all of your financial surprises will be major. These costs can be as simple as forgetting you had to pay club dues or getting a last-minute birthday gift for a friend. Allocating some extra money in your budget allows you a little more cushion for unexpected expenses–big or small. 

After accounting for savings and surprises, you can tuck a little bit of money away each month for splurges. Your budget category for indulging in things you enjoy could be broad or designed for a more specific purpose, like a spring break trip. Having designated savings funds means that you’re more likely to stay within your budget. You’re also less likely to charge spontaneous purchases to your credit card. If you must spend money on extras, try to utilize student discounts to your advantage when splurging. 

 

3. Track your spending 

An important tip for budgeting is to track your expenses regularly to make sure you’re getting the most out of your budget. Once you get to campus, record everything you spend money on for an entire month. A mobile app will make this easier, but you can also save receipts or use a notebook. Once you see exactly where your money is going, you can adjust your budget as needed. 

Remember, a budget is made to aid you in your finances, not hinder you. Don’t be afraid to expand, limit, add, or remove categories from your budget as time goes by. The most beneficial budgets are ones that are realistic but flexible. Tracking your income and expenses every few months could help your student budget stay relevant to your college life.

 

4. Review your budget regularly

Many financial experts say you should review your spending at the end of every month. You'll have a lot on your plate, but finding a way to fit in a regular budget review can benefit you significantly. You can set a reminder to examine your budget on a specific day each month. Alternatively, you can take time after a scheduled activity you never miss to check your personal finances. For example, each week after a weekly study group or yoga class, sit down with your budget.

If you notice that you are starting to run low on spending money, you'll need to eliminate some expenses. The most obvious place to cut back in the short-term is to reduce your nonessential purchases. Yet, you might find it is more sustainable to reduce your required spending, too. Switching to a cheaper meal plan, renting textbooks instead of buying them, and canceling your off-campus gym membership to use your college’s gym are ways to reduce your essential purchases. 

 

5. Set up direct deposit

You can keep track of your money by setting up three bank accounts: a billing account, a checking account, and a savings account. Have the money you've budgeted for each category automatically deposited into these accounts. With the three different accounts, it will be easier to separate the money in your mind. Automating your deposits will also mean that you’re less likely to tap into your savings account or spend money allocated for bills. 

Your debit card is linked to your checking account, so you’ll need to be conscious of your monthly expenses. When your checking account is empty, it's empty; there’s no way around an empty bank account. To avoid dipping into the other bank accounts, you’ll need to be able to hold yourself accountable. 

 

6. Use credit cards wisely

When you use your credit card wisely, it can be a helpful tool during college. Not only can it help cover your expenses, but it can also offer students a manageable way to build credit. If you’re interested in having a credit card in college, you can apply for the 1FBUSA Student Credit Card today.

Being a responsible credit card holder is very important. If you use a low-limit credit card and only charge things you have budgeted for, it can help you develop good credit habits when you’re first starting out. You’ll want to make sure you’re not spending money you don’t have by paying off your balance regularly. Paying your bill in full and on time each month will prevent you from incurring fees or debt at a high interest rate.

 

Because your spending habits in high school vs. in college will be different, you should take the time to budget for life after high school. Sticking to a budget won’t ruin your college life. In fact, these money management tips for college students can help you live your college dreams to the fullest. By checking with your budget, you’ll be able to enjoy your college activities without worrying if you’ll have enough money to pay for them. 

 

 

  WHAT'S NEXT?

🏡Prepare to reach your future financial dreams by reading 6 Smart Ways to Save for Your Future

💸Making a budget is tricky. Find a template to help in How to Create Your Budget.