How should students pay for monthly expenses? Start by writing down all the sources of after-tax money you get each month, Waters says. That includes money from a part-time job, financial aid, stipends, grants, loans, or a monthly allowance from your parents.<\/p>\n\n\n\n
Next, figure out how much you\u2019re spending each month. Waters recommends looking back at three months\u2019 worth of your expenses. To do that, refer to your debit and\/or credit card statements, plus any record of money sent through payment apps.<\/p>\n\n\n\n
You should account for every dollar you\u2019ve spent, Waters says, separating expenses into common categories such as:<\/p>\n\n\n\n
- \n
- Cell phone<\/li>\n\n\n\n
- Food<\/li>\n\n\n\n
- Entertainment (movies, fun with friends, streaming services)<\/li>\n\n\n\n
- Clothing<\/li>\n\n\n\n
- Internet<\/li>\n\n\n\n
- Transportation (airfare, bus tickets, car insurance, gas)<\/li>\n\n\n\n
- Tuition<\/li>\n\n\n\n
- Room and board or rent<\/li>\n\n\n\n
- Textbooks and school supplies<\/li>\n<\/ul>\n\n\n\n
The point is to add up everything, Waters says. \u201cWe want a line item for it all.\u201d<\/p>\n\n\n\n
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If you\u2019ve gotten this far and you already realize that your expenses weigh in heavier than your income, consider ways you could start giving your income a leg up. Check out these tips to help you make money as a college student<\/a>.<\/p>\n\n\n\n
Create your college student budget<\/h2>\n\n\n\n
Making and following a college student budget is the best way to ensure you have enough money to pay for the things you need while still having some money left over for the things you want. Here\u2019s how to budget as a college student:<\/p>\n\n\n\n
1. Create your spending categories.<\/h3>\n\n\n\n
Your budget should contain categories for all your major spending groups. (Refer to the list of expenses you created when assessing your expenses.) Then decide how much you must<\/em> spend for each and assign a dollar amount or percentage to that category.<\/p>\n\n\n\n
2. Choose a type of budget.<\/h3>\n\n\n\n
There are different budgeting styles, and Waters notes that one might fit your specific situation better than another. You could try the 50\/30\/20<\/a> rule, which allocates 50% of your money toward needs (food, textbooks, tuition); 30% toward wants (entertainment, clothing); and 20% toward savings.<\/p>\n\n\n\n
You can also go with the envelope system<\/a>, which involves setting aside a limited amount of money for each spending category. Once you hit the limit in a given category by running through money in its envelope\u2014whether literal or digital\u2014you can\u2019t spend any more in that category until the next budget period begins.<\/p>\n\n\n\n
3. Optimize your budget regularly. <\/h3>\n\n\n\n
Once you\u2019ve set a budget, keep track of it. If you\u2019re consistently under or over, see if there are areas where you can save more or spend less. As your needs change, so should your budget.<\/p>\n\n\n\n
Prioritize essential expenses<\/h2>\n\n\n\n
Whichever kind of college student budget you choose, make sure necessities such as your tuition payment (if you\u2019re paying for school yourself) or things like bus fare to get to your part-time job are covered. To make that easier, Waters says you can find ways to reduce your expenses, such as:<\/p>\n\n\n\n
- \n
- Renting, borrowing, or buying used textbooks<\/li>\n\n\n\n
- Buying snacks in bulk or cooking meals that are large enough that you\u2019ll have leftovers<\/li>\n\n\n\n
- Asking for student discounts when shopping in person or looking for online discounts<\/li>\n\n\n\n
- Opening a cash back checking account or using a cash back rewards credit card to earn rewards for purchases you already make.<\/li>\n<\/ul>\n\n\n\n
Focusing on what you must<\/em> pay for first can help to lessen the debt you acquire, Waters says. Bonus: If you can do that, you\u2019ll also reduce the amount of interest you\u2019ll have to pay while in school or after you graduate.<\/p>\n\n\n\n
Manage your fixed and variable expenses<\/h2>\n\n\n\n
Certain expenses, such as your cell phone or car insurance bill, typically stay the same every month. Those are fixed expenses<\/a>. Variable expenses include costs that can change from month to month, like food, gas, or entertainment, depending on your behavior. Variable expenses can be tougher to budget for, but they can also provide more flexibility to your budget.<\/p>\n\n\n\n
The envelope budget method can help you learn to budget more accurately for variable expenses when making a college student budget. For example, let\u2019s say you spent $140 dining out in month one, $175 in month two, and $120 in month three. Take the average of the three\u2014$145\u2014and set that as your \u201cdining out\u201d monthly line item that you shouldn\u2019t exceed.<\/p>\n\n\n\n
\u201cThe biggest \u2018don\u2019t\u2019 for college students is saying yes to everything,\u201d according to Waters. Instead, it\u2019s important to set limits. \u201cGet to know your town and find ways to hang out that are free or low cost.\u201d<\/p>\n\n\n\n
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Save for emergencies<\/h2>\n\n\n\n
College might not seem like a natural time to save money, especially if you\u2019re not making much to begin with\u2014but it can be done. And saving money will be a critical skill you can continue to use throughout your life.<\/p>\n\n\n\n
Often, the easiest way to save is to make it automatic, Waters says. You can automate your savings<\/a> by opening a savings account and setting up regular transfers from your checking to your savings account. You can choose how much is socked away based on a percentage of your income, as with the 50\/30\/20 rule, or you can set aside a chunk of your remaining balance at the end of each month.<\/p>\n\n\n\n
It\u2019s also important to try and build an emergency fund<\/a>, even if it\u2019s small, Waters says. An emergency fund is money you use for unexpected expenses\u2014think paying to fix a flat tire, covering medical bills, or repairing a malfunctioning laptop. A good goal for the amount to save in an emergency fund is three to six months of your expenses. That might sound like a lot, but you can build your savings slowly over time.<\/p>\n\n\n\n
Waters notes that a savings account or emergency fund is also a great place to stash cash you weren\u2019t expecting to receive\u2014like birthday money from Grandma. Think of it this way: If you save $25 a week, in just six months, you\u2019ll have saved $600. This is also a great chance to learn how to invest as a college student. By keeping your savings or emergency fund money in a high interest rate savings account, you can watch how your savings grows over time with interest.<\/p>\n\n\n\n
Start building your financial foundation today<\/h2>\n\n\n\n
Once you\u2019ve set a budget that you feel comfortable with, make sure to regularly check in with yourself about your spending. One trick that\u2019s great for budgeting for college students is a financial checklist<\/a>, which helps you look closely at your spending habits and whether your needs have changed. Earning more or less money, a change in your rent, or a tuition hike can make it necessary to reassess your budget and tweak as needed, Waters says.<\/p>\n\n\n\n
College can be the perfect time to start your financial future off on the right foot. Things like building credit, saving for retirement, and creating a thriving savings account all come from making the right choices early\u2014and regularly. Getting a handle on your finances in college with a college student budget is one of the best first steps you can take.<\/p>\n\n\n\n