Budgeting for College Students: Why and How
September 26, 2019
If you’re going to college this fall, you’re probably excited — and a little nervous. You have a dorm to decorate, people to meet, and a campus to explore. However, college can be expensive, so it’s important to take a step back and consider how to pay for it.
Budgeting for college students is a unique process, as you’ll have very different expenses than someone who isn’t in school. If you’re not sure where to start, follow this guide to come up with a college budget plan.
The word “budget” may sound overwhelming and technical, but it’s actually pretty simple: a budget is simply a breakdown of all the income you have coming in and all of your regular expenses over a set time period.
Having a budget in place means you’ll know exactly how much of your income you spend each month, and whether or not you’re spending outside your means. Once you have a good snapshot of your finances, you can come up with a spending plan that works for you.
Budgeting for college students in 4 simple steps
When coming up with a college budget, follow these four simple steps to develop a comprehensive view of your finances. You can download Purefy’s college budget template below to help you through the process.
1. Talk to your family
If you’re in school, a college student budget is essential for managing your money (and limiting how much you take out in student loans). If you’re going to college or are already in school, you should start the budgeting process by having conversations with your parents or guardians about:
- How much money (if any) is saved for college: Your family may have set aside some money to pay for some or all of your education. However, not everyone can afford to do so, and it’s important to understand your family’s situation.
- If your parent or guardian will help you with college costs: Even if your parents can’t afford to pay for your tuition or room and board, they may be willing to help in other ways. For example, you could live at home and commute to college, they may be able to cover the cost of textbooks, or they may be willing to take out student loans in their own names.
- Your financial status: Your status — dependent or independent — has a big impact on what financial aid you’re eligible to receive. Talk to your family to make sure you’re on the same page so that you can choose the right option when you fill out the Free Application for Federal Student Aid (FAFSA).
Once you have a better idea of what your family can contribute, you can move forward with the budgeting process.
2. Plan for expenses
When coming up with your college budget plan, remember to account for these expenses:
- Tuition and fees: Your tuition and fees are your biggest expense. Depending on where you go to school, your cost could range from $26,290 per year to $35,830 per year, according to The College Board.
- Room and board: You’ll also have to worry about your housing and food expenses. On average, room and board will cost you $11,140 per year.
- Textbooks: Textbooks are notoriously expensive. You should expect to spend $1,240 per year just on books and supplies.
- Transportation: Depending on where you go to school, you may have additional transportation expenses. You may have to pay car insurance, pay for fuel, or simply pay for a bus or train pass. On average, transportation will cost you $1,160 per year.
- Clothing: While you shouldn’t plan on blowing your savings on the latest trends, you should set aside some money each month to pay for clothing and shoes.
- Entertainment: As a student, you can take advantage of a lot of free or low-cost activities, but you should still plan on spending money on entertainment. Make sure you allocate money for things like a Netflix subscription or video games (if that’s your thing).
- Student loans: If you take out student loans, you may want to make interest payments while you’re still in school. Make sure your budget includes your monthly loan payments so you can take advantage of this interest-saving technique.
3. Cut your expenses
Once you know exactly how much your expenses are, you can identify ways to save money. Here are a few ways you can save money.
- Apply for scholarships and grants: Scholarships and grants can reduce your college costs so you don’t have to take out so many student loans. You can search for scholarships and grants on FastWeb and Scholarships.com.
- Rent your textbooks: You can save hundreds of dollars each semester by renting your textbooks rather than buying them. You can rent books through Amazon, Chegg, and ValoreBooks.
- Live at home and commute: If possible, consider living at your parents’ home and commuting to a local college. You’ll save thousands of dollars each year on room and board fees.
- Skip the meal plan: If the school doesn’t require you to sign up for the meal plan, you can save thousands by skipping the meal plan and shopping for and preparing your own food.
4. Earn extra money
You can dramatically reduce how much money you need to borrow to pay for college by working during the summers or by picking up a part-time job during the school year.
For example, let’s say you pick up a summer job and work 40 hours a week and make $7.25 per hour — the federal minimum wage. Over the course of three months, you’d make $3,480 before taxes.
During the other nine months, let’s say you worked just 10 hours a week and earned minimum wage. You’d earn another $2,610 to bring your annual earnings to $6,090, If you applied that money to your college costs, that’s thousands less each year you’d have to take out in student loans, and you’d still have plenty of time to enjoy the college experience.
Managing your money in school
When it comes to budgeting for college students, it’s important to keep all of your education costs in mind so you can get a complete snapshot of your finances. Once you know what your expenses are and how much money you have coming in, you can start to come up with a plan to pay for college.
If you need to take out student loans to cover the cost of your attendance, make sure you shop around to get the best rates. You can use Purefy’s rate comparison tool to compare rates from multiple lenders at once so you can save money.