Heading off to college is a huge and exciting milestone, but it can also be a big adjustment. You’re no longer living with your parents, and you know what that means, right? It’s time to create a college budget. While your basic needs, bills, and even luxuries have quite possibly been covered up until now, you’ll need to learn to be more fiscally responsible for yourself.
Don’t worry; it’s not as terrible as it sounds. In fact, it’s a lot better than the alternative, which is stressing about money when you should be enjoying your college experience. The boring but important and practical truth is that learning to budget when you’re in college sets you up for success in the future.
If you’re not yet financially literate, though, the whole idea of coming up with a college monthly budget might seem overwhelming. So, here are some important points to keep in mind as you build your budget.
What are some typical college student living expenses?
You might be thinking, Why do I need a budget? I don’t have any expenses. Alas, you’d be wrong. When you spread your wings and fly off into the great big world, you leave the nest. And the nest egg. Well, you get the picture.
Tuition isn’t the only cost associated with college. You’ll also have to contend with the cost of housing, books, and supplies, transportation, utilities if you live off-campus, groceries (that meal plan only goes so far), entertainment, medical expenses, clothing, and laundry — the list goes on. Welcome to adulting; we’re all broke here.
What steps should you take before creating a budget?
The expenses you’ll be dealing with once your family drops you off at the dorm (or wherever you’re bunking) may differ from the next student depending on various factors. For instance, is your family contributing to your college expenses?
Some students go it alone; others have some or all of their costs covered by their parents. So, before you can accurately set a budget, you need to have a sit-down with your family and find out what (if anything) they plan to kick in toward your college life.
Why is budgeting important for college students?
Being on your own for the first time is a heady experience — it’s easy to get caught up in your newfound “freedom” and forget to make allowances for things like rent or groceries. It goes without saying this isn’t ideal, and no one wants to be the freshman begging their parents for bail-outs all the time or who can’t hang out because they’re so worried about the negative balance in their bank account.
Beyond that, though, budgeting is important because it’s a strategy that will follow you for the rest of your life. Becoming financially savvy now could mean retiring early one day. Plus, putting together a budget you actually stick to brings with it a maturity and responsibility factor you may not have had before. This level of responsibility will impact how you view your studies and interpersonal relationships.
What is a good budget for a college student?
Listen, we know you came here for a hard number. But the only way to develop a realistic budget is to assess your individual financial situation. To start with, you need to list your total income. This includes the money you brought with you to school, refunds or grants from financial aid, funds from any regular paycheck, and any monetary contributions your parents make to you. Once you know how much money you’ll be working with on a monthly basis, you can turn your attention to expenses.
What are your fixed expenses? Necessities that have the same price every month comprise this category. For example, that might be room and board, a car payment, your phone bill, etc. Add up the total of your fixed expenses and subtract that from your total income. What remains is your disposable income. Out of it, you’ll need to subtract any variable expenses (necessities/needs that vary in price month to month). Think along the lines of entertainment and groceries.
The final figure after subtracting all of your expenses is your “wiggle room.”
How can you live on a college student’s budget?
This may be the first time in your life you’ve had to pay attention to your spending, so give yourself a little grace. This part of adulting isn’t really fun for anyone (except perhaps aspiring accountants or financial analysts). The key to making the most of your college budget is tracking your spending.
Analyze each expenditure at the end of the month and be really honest with yourself. Do you really need to hit Starbucks for that Venti Cold Brew three times a week? Tweak your budget as your income and expenses fluctuate so you’ll stay on track. Fortunately, there exist myriad budgeting apps today that can basically do all of this for you: Mint, LearnVest, Slice, PocketBudget, Personal Capital, Wally, and Dollarbird are a few faves.
And, finally, be intentional about what you do splurge on. You still want to squeeze in some frivolous fun. This is college, after all!