More Frequently Asked Questions About Budgeting In College
CollegeBoard data show that students who spend moderately should prepare a 12-month budget of approximately $25,000. This number can act as a guideline, but remember that your budget must reflect your personal lifestyle and financial needs. Use the tips in this guide to help reduce your spending.
According to the 12-month budget above, the average college student spends about $2,100 per month on living expenses. The amount of money you need depends on your own budget calculations.
After evaluating your monthly income and expenditures, create a detailed budget spreadsheet that allows you to categorize each expense. More importantly, you need to carefully track your spending to discern trends over several months. This information helps you locate areas where you can cut spending and allocate funds to a savings account.
According to CollegeBoard, the amount of money a student spends on personal/living expenses depends on where they go to school.
A 2018 survey by the Federal Reserve revealed that about 40% of Americans could not afford $400 of unexpected expenses. In general, you should save enough emergency funds to cover at least one month of expenses. This money may also come in handy after graduation as you search for work or if you need to relocate.
Editor’s Note: This article contains general information and is not intended to be a substitute for professional advice. Please consult a professional advisor before making decisions about financial issues.
Save Money On Housing In College
If living inside the campus is quite more expensive then you should start looking for a new place for living. Always try to live with a roommate so you can split the rent bills. Live with your family if possible.
Avoid buying expensive or extra decorative items for your house. Do your own laundry and clean your house by yourself instead of paying any housekeeper or maid.
How To Make A Budget
Now that you understand the importance and benefits of budgeting for college students, youre asking how to create a budget while in college.
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Use Credit Card Rewards
One of the best ways to save money on travel is to use credit card rewards. As we talked about earlier, using a credit card can earn you bonuses and rewards for your normal spending. Plus, many cards offer a sign up bonus that can get you free travel pretty quickly.
If travel is important to you, then consider checking out the Best Credit Cards For Travel Rewards. These cards will earn you the best bonuses and rewards that can get you closer to free travel.
Be Realistic About Life After Graduation
When I was choosing my major, I only vaguely thought about which careers would be lucrative. This should be clear in the fact that Im a writer by trade. I encourage you to do a Google search of your hypothetical future salary. Be sure to look at the entry-level position, or expect to make at the low end of the range when youre first starting out.
When you dream of the cool city life youll embark on in your 20s, do yourself another favor and check out listings fo rental costs in the area you want to live. Oh and one more thing: whatever entry-level salary you think you might make? Divide it by 12 and then take away 25% of it. Welcome to taxes, my friend.
And for the real-life example: my writer salary at my first job was $30,000 a year. Rent was $1600/month. My monthly income after taxes? $1,875/month. So yes, I got a roommate, slashed the cost in half, and learned to have fun on the weekends for free .
Some of these financial discoveries are very rude awakenings for fresh-faced college grads. Go in with wide eyes and a firm grasp of reality for the smoothest transition to adulthood. Judging by the fact that you made it this far in an article about how to manage your money as a college student, were gonna make an educated guess and figure youll end up just fine.
Thanks for reading. Best of luck in your studies, and enjoy the pizzaitll never taste better than it does right now.
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List And Categorize Your Expenses
The first step to budgeting is for a student to make a budgeting worksheet listing all expenses and categorizing them by needs or by wants. As defined in the glossary above, a need is a basic necessity required for survival. A want is something a student wishes they had, but does not need to survive.
Before they even begin the first day of school, all students should have an idea of some major expenses tuition and academic fees, especially.
To count up additional expenses, students can go through their last months bank statements and compare how much they spent on needs and how much they spent on wants. These can be organized on a scale of 1-3 to prioritize their importance:
- 1 = must have
- 2 = really want
- 3 = would be nice
This categorization would label some needs as 2s, such as saving up money for a house. It can also help students quickly identify any unnecessary spending, and take out any level 3 wants from their budget as needed.
Snag Those College Coupon Books
Most businesses in college communities have a variety of coupons available to the universities. Coupon books are usually readily available around campus and are full of discounted experiences and dining options!
These coupon books are fantastic because your student and their friends will have easy access to them, making it simple to coordinate an activity together. With a plethora of coupon options, they can easily decide what will be the best deal and fit for all to enjoy.
These books are also a good way for students to find new activities around them to do together as well as help them figure out what will fit into everybodys budget.
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Remember To Set Some Money Aside
Another important part of budgeting is making sure youre saving money for lifes necessities and pleasures.
You can do this by adding different savings goals as expenses within your budget, and allocating your income to cover the expense every month. In practice, you can move the money into a separate savings account if you dont spend it that month.
You might not know how much to save each month, but try to save up several hundred dollars in an emergency fund. You can use the money to:
- Repair your vehicle
- Buy a last-minute flight home
- Cover another unexpected crisis
Other goals may be a little more fun:
- Saving up for a semester abroad
- Traveling during spring break
- Collecting a security deposit for off-campus housing
Or, if youre taking a long-term approach to your finances, perhaps you want to pay off student loans early to save money on interest.
Be Smart About Your Meal Plan
Meal plan costs can vary depending on your schoolcheaper ones can be about $1,000 per semester, but some can be three times that ! Some colleges might make you get a meal plan for your freshman year, so if you have to have one, make sure you actually use it. But if you dont have to have one, meal prepping and making food from scratch are your new best friends.
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Get Your Spending Habits In Check
Alright, this is the point in the process where most people start getting stressed with their budgets. Once your fixed expenses are taken care of and your saving quotas have been met, whats leftover is yours to spend but remember, youre aiming to have 2.5-3x of your number in your checking account at all times.
People get stressed here because their spending habits dont match up with their goals. So they sit down at the end of the month, pout about how much they spent on Starbucks lattes and restaurants, and declare ONCE AND FOR ALL! that theyll cut down their spending from here on forward.
Then theyre right back at Starbucks the next morning because,
Im really in a rush today Ill start making my coffee at home tomorrow, I swear.
Now, heres the thing Im not against buying Starbucks lattes. I buy coffee at my local coffee shop 2-3 times a week. If theres something you like, and you can afford it after all your important financial goals are taken care of, then let yourself buy it! Were not on this earth to drive numbers in a bank account as high as they can possibly go money is a tool you should use to build a happy life. So drink your $3 coffee if it makes you happy and if doing so is still below your means.
What Im getting at here is that habits are powerful. Sitting down and creating a strict budget is not likely to change them. Rather, you need to start building changes into your daily routines and attacking the habits at their roots.
Set Up An Emergency Fund
Even college students need some kind of emergency fund to fall back on.
First, it will relieve some of the stress in case of the unexpected. Secondly and perhaps more importantly it will keep you from racking up .
Setting up an emergency fund is no big deal:
- Open a savings account that is easily accessible. Preferably, this will be with the same bank that you use for checking, so you will be able to transfer money easily in case of an emergency.
- Save one to three months worth of expenses in this account. This may take some time, depending on the amount of income that you have. This is a great opportunity to put any money that was gifted to you for graduation to good use.
- Whatever you do, dont touch that money unless its a dire emergency. Tickets to see Olivia Rodrigo dont count!
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How To Budget For Students
While the basic budgeting process requires you to track your income and expenses, the deeper fundamentals can be more difficult. Youll want to identify and set goals, and then figure out how to budget and save money to make progress toward achieving those goals. Here are four steps you can take to start.
Setting Your Financial Goals And Budget
Its expensive to go to college. College tuition has risen for decades at virtually all schools, and very few students are fortunate enough to not have to be concerned with this reality. Still, there are things you can do to help control costs and manage your finances while in college. Begin by thinking about your financial goals.
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Have A Free Checking Account
If you already have a checking account, you might be surprised when you find out the fees involved. Many banks waive those fees for students, or if you have a direct deposit, or other account with the bank. But other banks don’t.
You need a free checking account. This is a baseline to save money – you should never pay for banking. Banks have plenty of ways to make money and checking and savings accounts shouldn’t be one of them.
Our favorite account for college students is Chime Bank. Chime has a great mobile app, free checking, and best of all, no hidden fees. Check out Chime Bank here.
If you’re looking for other options, check out our full list of the best online banks.
Find Student Travel Tours
Students have a slight advantage when it comes to travel because there are a lot of companies that cater to student travel. For example, Contiki Tours offers student travel tours for cheap!
These tours are specific to 18-35 year olds, so you’ll be with a group of young adults who are all interested in the same type of trip. There are trips almost everywhere, with awesome destinations that any student would enjoy.
Check out Contiki here and see if there are any tours that make sense for you.
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Whats Coming In And Out Of Your Pocket
It is important to know what sources of funding are available to you as a UCC student, as these can provide extra funds to help you in your college career.
Part time jobs are great for your pocket, your CV, give great life experiences and life skills, but it is important to maintain a healthy study/work/ play 4 relationship, and your work should complement your studies, not the other way round!
Whats going out of your pocket? College life costs money and it is important to manage your funds in order to make it stretch and cover the whole academic year. From Accommodation to Fees, Food to Travel Expenses, these expenses will need to be covered so you can attend college. Planning and knowing what your expenses will entail is very helpful to allow you spend wisely and avoid unnecessary stress or worse, DEBT! Make a budget and play around with it, learn, make mistakes, it all part of learning how to become an adult!
Help Them Establish Credit
Help your child ease into the credit card world by giving them a debit card and teaching them how to use it. Have them opt out of overdraft protection so they cant use the card if theres no money in the account. The debit card should be used in accordance with the budget youve created and the categories youve discussed what you will cover and what they will cover.
After a year or two of this, youre ready to graduate to a credit card, Godfrey says. Many experts agree that co-signing for a card is a bad idea, which youll have to do if your child is under 21. You can either wait until they hit that age or they can get a card on their own if they can show some income from the jobs they’ve been working. Having their own card is a good step when it comes to being responsible for debt and establishing a credit history. Also, it’s important they know that carrying a balance is often a bad idea. You wouldnt throw the keys to the car to a 16-year-old without putting them in drivers ed, Beacham says. Dont give your child a credit card without very specific guidelines.
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Best Budget Planning Tips For College Students
Itâs one thing to talk about budgetingâand another to master the life skill of money management. If youâre living on your own for the first time in college, budgeting basics is one life course you donât want to fail so badly that it takes years to recover. Here are 10 best budget planning tips to make money management easier for you.
Protect Your Security Deposit
Your security deposit is one of your biggest “investments” in college. You usually have to pay $1,000 or more to ensure you don’t mess up your apartment. That’s a lot of money that you can lose if you’re not careful in protecting your apartment.
So, make sure you protect your security deposit by keeping your apartment in great condition.
An alternative to your security deposit is using security deposit insurance. This is an alternative where you pay a company and never have to worry again. Check out Jetty for their security deposit insurance.
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Save Money On Transportation In College
If you live inside the campus or your resident is not far from college then you dont need to worry about the transportation charges. If you live far from the college or you prefer going to college in a fancy car.
You need to stop that in process of saving cash. Instead of going to college in a fancy car you can use public transport or use a bicycle. We all know that maintaining a car is much more expensive than buying one. Therefore if you want to save cash then you should use public transportation more often.
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