How to budget in college

The cost of attending college has skyrocketed over time. On average, students attending public four-year, in-state colleges pay $11,260 in tuition and fees annually, which is $270 higher than in 2022-23, according to College Board’s Trends in College Pricing and Student Aid 2023 report. This figure increases to $41,540 for students attending private, non-profit four-year institutions, which is about $1,600 higher than the prior year. And that’s before room, board, books, supplies and other expenses are factored in.

There are ways to help curb these costs, though, like living at home or selecting a school with a lower price tag. Still, it’s vital to create a budget that helps you build positive financial habits and live within your means. Most importantly, an effective budget can help you steer clear of costly credit card debt, which could mean more freedom once you graduate and enter the real world.

How to create a budget

“Figuring out your finances in college is about so much more than figuring out how you’re going to pay your tuition,” says Stefanie O’Connell Rodriguez, a millennial money expert. “It’s about building a financial foundation for the rest of your life.”

In other words, college is a time where you’re starting to manage your own cost of living from food to housing to health insurance. With that in mind, remember to consider the full picture beyond academics when you start creating financial plans.

A budget can help you stay on track with your spending while you work toward your degree, but your budget doesn’t have to be restrictive. Think of it more as a plan for your money than anything else, and don’t forget that your budget can be used to plan for the things you want and not just what you need.

If you want to start budgeting, here are the core steps to take:

• Step 1: Write down all your fixed expenses. Include all your regular recurring expenses including costs for rent, car payments, insurance, cable, internet and other bills. Include these expenses in one place where you can easily add them up.
• Step 2: Create an estimate for how much you want to spend on discretionary items. Discretionary bills can include anything you have some power over, like how much you spend on food, groceries or dining out. List these expenses alongside your fixed expenses so you can get a full picture of how much you should theoretically be spending each month.
• Step 3: Take stock of your income. Figure out exactly how much you have to spend each month, whether that includes income from a job, student loan funds or money from parents.
• Step 4: Write down your expenses and your income side-by-side. Compare your income to your proposed spending plan to see how the two figures stack up. If you find you have too much planned spending in a category like food or entertainment, tweak your budget to make sure the numbers line up.

If you want to automate these steps, you can also download an app like Mint, Empower or YNAB to track your money, says O’Connell Rodriguez. But you can also use a spreadsheet or simple pen and paper.

Basically, any type of budget can work if you put in the effort, she says.

“At the end of the day, the one that works best is the one you stick to,” she says.

Plan for your expenses

The steps above may seem cut and dried, but a lot goes into planning for college expenses, and that’s especially true if it is your first year of school. While bills like rent and a car payment are easy to anticipate, you’ll want to keep an eye out for surprise expenses you haven’t thought about.

Athena Valentine, a financial expert at Money Smart Latina, says that parking can be pricey if you live off-campus, and this expense can add up quickly. If you plan to have a car at school, this is one major component of your budget you’ll want to take a look at.

“It also sounds random, but check to see if you will have any additional expenses for a class you are taking or interested in,” she says.

Valentine took a religion and pop culture class in college that required her to watch a different movie each week, and she recalls that her peers encountered plenty of surprise expenses trying to fulfill this requirement.

“I had Netflix and HBO, but if I didn’t and couldn’t find them at the library, I would have had to pay up $3.99 each time,” Valentine says.

Now more than ever, it’s also important to make sure you have a laptop with a good processor, she says. A lot of students use notebooks or other tablets, she says, and that probably won’t cut it this year due to all the additional e-learning colleges are implementing.

“Not only do you have to be able to stream a variety of software live, but you’ll have to use your laptop for reports and papers,” Valentine says.

Track your spending

Once you’ve thought long and hard about your expenses and created a budget you plan to stick to, you’re not quite off the hook. Christopher Struckhoff, a founder and CEO at Lionheart Capital Management, says the best piece of advice is basic but crucial to understand if you want to stick to your spending plan.

“Check in on your budget on a weekly or monthly basis,” Struckhoff says. Typically, that means adding up your spending in all the budgeting categories you set, then taking the time to see if you’re sticking to your plan or if you’re falling off the wagon.

You may also find you need to tweak some of your budgeting categories over time, which is perfectly fine. For example, you may find you need to spend slightly more at the grocery store than you realized, but that you’re not spending as much as you thought on gas for your car.

Struckhoff says it can help to use a budgeting app for this reason, since most budgeting apps help you pull in spending information to make tracking easier.

The bottom line

Seemingly small choices you make during college, from cooking and packing your lunch instead of dining out to getting a roommate to save money, are going to form the habits and lifestyle expectations you carry with you as you leave college and move forward with your life, O’Connell Rodriguez says.

And that’s why budgeting now, while you’re in school, is so important. Budgeting in college helps you learn to get creative with your spending, and to live within your means no matter what stage of life you’re in.