A smart spending plan helps you achieve your goals, both now and in the long run
Going to college comes with a lot of firsts. For many, it’s the first time living away from your parents, the first time having choices about what to study, and the first time managing your own finances. To help you stay on top of your money you’ll need a plan, also known as a budget.
What a budget is and isn’t
The word budget might bring to mind strict, inflexible spending rules without any flexibility. But budgeting is really about anticipating and planning for your expenses, so you have funds earmarked for the things you care about, spend less on the things you don’t, can save for your short- and long-term goals, and never feel blindsided.
Your budget is also personal, and should reflect your values and priorities for the way you want to live during college. For example, is it important to you to sample your city’s restaurant offerings, or do you prefer to save money for concert tickets? Are you satisfied with a bare-bones apartment, or do you crave a comfier home? Consider your own preferences and desires for both now and in the future as you build your college budget.
Steps to creating a college student budget
Once you’ve nailed down what your priorities are for your money, it’s time to get down to the details. Here’s our step-by-step guide and a monthly budget sheet to help you through the process:
1. Make a list of all of your expenses, including necessities like food, housing, tuition, and gas, as well as discretionary items like dinners out and entertainment. Divide the list into three categories, and put each one in order of importance:
- School expenses. This includes anything you’re responsible for that isn’t directly paid by your parents, financial aid, or student loans. It can also include living expenses while at school such as rent, utilities, groceries, toiletries, medications, and other basics you need.
- Personal expenses. Your streaming subscriptions, clothes and coffee runs would go on this list.
- Infrequent expenses. Some of these are expected like plane tickets home for a holiday, and some are unexpected, but still important to budget for, like your computer breaking or car needing major repairs.
2. Then, make a list of your sources of income, their amounts after taxes have been taken out, and when in the month or year you can expect to get paid. You’ll also need to find out when funds from student loans and other financial aid will come in and how they’ll be disbursed. And if your family has saved money in a 529 Plan for your education, talk to them about how and when you’ll be able to access the money.
3. Create a budget that takes all of this into account and decide where each dollar should go. This will ensure that your spending is in line with your priorities.
One way to build a budget is to keep track of your spending for a week. Tracking groceries, transportation, socializing, and other miscellaneous expenses can reveal that you may spend more than you think. From this list, you can better estimate how much your monthly expenses are, which can help you set a budget.
Creating a budget may also be a little bit of an experiment, especially as you settle into the semester. You may find expenses you didn’t anticipate as you build your college budget, like dues for an extracurricular activity.