Creating a College Budget: 3 Tips for Students and Parents

1.  Estimate your income and expenses

Budgeting is about balancing your income and expenses. The income category can be a little tricky for college students, as their money can come from multiple sources at various times during the year. For example, your income could be a combination of your personal savings (like a 529 plan), a part-time job, student loans, or financial aid.

As a first step, identify all sources of income and try to estimate how much is coming in each month (even a ballpark figure is fine). If you receive loans or financial aid, figure out how often these payments are disbursed (e.g., per quarter, semester, etc.), you could then divide the total accordingly to estimate your monthly income for a given term (or the whole academic year if you wish).

Next, figure out your monthly expenses. This could include things like housing, food, books, supplies, transportation, as well as tuition and fees (if not already covered by your financial aid).

Once you’ve identified all your expenses, divide them into two main categories: fixed expenses vs. variable expenses. Fixed expenses could be things like housing, meal plans, and transportation, while variable expenses might include takeouts, entertainment, or any other discretionary spending.

By listing out your fixed and variable expenses, you can better track where your money is going each month. And if you ever need to cut back on spending, you could easily see which non-essential expenses to target.

2. Calculate your monthly budget

With your estimated income and expenses in hand, it’s time to calculate your budget by subtracting your total expenses from your total income. If you have money left over, that means you’re living within your budget. While it may be tempting to spend that money, it’s a good idea to put those extra dollars towards a savings goal or an emergency fund.

If your expenses are greater than your income, however, it means you’re overspending. This is when you’ll want to look at your variable or non-essential expenses (e.g., entertainment, takeouts, etc.) and see what you could eliminate or cut back on in order to balance your budget (when income equals expenses).

3. Stick to your budget and update it regularly

Once you have a budget plan, stick to it consistently. You’ll want to review and update it regularly. This is especially true when you’re in college and your income and expenses can change from term to term. If this is your first time working with a budget, it may take some trial and error to get it just right for your circumstances.

If you do find yourself overspending once in a while, don’t be too hard on yourself. It can happen to anyone. The important thing is to be mindful and not make a habit out of it.

The costs of attending college can be expensive enough for students, so be flexible and realistic about your needs and wants when setting your budget to avoid incurring unnecessary debt (on top of your student loans).

Bottom line: Always strive to live within your means. This is a timeless financial principle that will serve you well beyond college.

Ask for help when you need it

Managing your own money can be challenging if you’re just starting out. But you don’t have to figure everything out on your own. There are many resources you can tap for help. For example, explore the number of budgeting tools and apps that are available online. They can help guide you through the planning process and help you track your spending and saving.

Don’t forget about your parents. Even though money can be a sensitive topic to talk about, your parents will likely have a good deal of financial wisdom, with real-life examples, to share.