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, and often a different experience from some of your peers. If you’re not sure where to start, follow this guide to come up with a college budget plan.
Budgeting 101
The idea of a “budget” may be overwhelming and technical sounding, 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 5 simple steps
When coming up with a college budget plan, follow these five simple steps to develop a comprehensive view of your finances. You can use Purefy’s college budget template to help you through the process.
1. Talk to your family
Once 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, guardians, or partner 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 talk about and 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 have the ability to offer you a small monthly stipend.
- If your parent or guardian can assist with student loans: Although many federal loans don’t require cosigners, most private student loans do, and others will offer better rates with a cosigner. Additionally, your parents may qualify for a Parent PLUS Loan in their own name for your education.
- 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 $10,740 per year to $38,070 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 $11,950 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.
Although you may use student loans for some of these expenses such as tuition and textbooks, other expenses such as clothing and entertainment cannot be paid for with student loans. As you track your expenses, you’ll see what else to include in your college budget plan.
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.
- 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 could save thousands by skipping the meal plan and shopping for and preparing your own food.
- 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. Also, many textbooks are available from your school’s library or interlibrary loan services.
- Look for college discounts: Whether it be a designated College Night or on-going promotions, many local and national businesses like offer college discounts. From Amazon to Amtrak to Adobe, often all you need is a student ID and/or .edu email address to receive these discounts.
- See what your college offers: Does your school offer free passes for public transportation or even their own shuttles? Does your department or a club you’re in ever offer free coffee? Be on the look out for what’s already available on your campus, especially around finals.
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.
Once you are in school, along with work study, paid internships, and other school-based programs, part-time jobs and other money making opportunities may be available in your area.
5. Track your spending
Whether you’re using our college budget template, pen and paper, or a tracking app, the best way to stay in budget is to see how much you’re actually bringing in and spending. This way you can keep your budget realistic and update it accordingly.
Keep an eye on your online backing account as well as any credit card statements to make sure everything’s accounted for. Be mindful of subscriptions so you’re not surprised when they’re renewed.
Don’t forget to give yourself some wiggle room – you won’t regret a rainy day fund or a little extra money to treat yourself. At the same time, keep in mind that some months are more expensive than others with holidays, end of term travel, and Spring Break.
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.
