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Budgeting & Saving

Create a College Budget Plan in 4 Easy Steps

Part of the college experience is learning to live independently, whether you move to campus or live with your parents. And a huge factor in establishing that independence is figuring out how to stick to a budget. Coming up with a plan to manage your money is a very adult task, and it's one worth tackling if you're on your way to—or have already begun—college life.

You can craft a budget for college by following a few simple steps: Understanding your income and expenses, creating a financial game plan and finding tools to track your spending. Having a solid budget in place throughout your college years will help you manage your spending, minimize debt, set realistic expectations and ensure you have the money you need to cover essentials all the way to graduation.

Review Your Financial Game Plan for College

Start by thinking broadly. Before you take the time to set up a budget, it's important to understand the financial expectations you and your family have about paying for college.

  • How will you pay for college? Tuition and the university fees that accompany it are your core college expenses—and the costs can range from relatively affordable to nearly astronomical. For most students, tuition costs are covered by some mix of parent contributions, financial aid, student loans and personal income or savings.
  • Are you eligible for financial aid or federal loans? If you're relying on financial aid or loans from the government or your school, you'll need to fill out the Free Application for Federal Student Aid (FAFSA) the spring before you're planning to attend college, if not earlier. Visit the FAFSA site to learn more about state and federal deadlines. And check out these tips on avoiding mistakes when applying for financial aid.
  • Will you or your parents be taking out student loans? Creating a simple budget will help you figure out how much money you need to borrow without taking on more debt than is needed. Budgeting in advance can also help you determine if you're comfortable with the level of debt you'll need to take on to get a degree from the school of your choice. After running the numbers, you may decide to go to a cheaper school or complete general education requirements at a community college.

While you're thinking about funding, take a moment to list all of your potential income sources for the school year, including your personal savings, possible work opportunities, gifts from family members and scholarships. You'll need this information when you're assembling your budget.

List Out Your Expenses

Once you have a plan for covering tuition, you can begin listing out the additional expenses you'll have during the school year. For each line item, make your best guess for how much you'll spend, both for the semester or quarter and month by month. For now, don't try to economize with your estimates: Give an honest assessment of how much you'd like to have to cover each category. You can sharpen your pencil and cut a few costs later in the process.

Here are some expense categories to consider:

  • Housing: Dorm fees or rent. Look at how much it costs to live in student dorms as well as the going rate for apartments near campus. Living off-campus and riding a bike or driving to school may be the cheaper option.
  • Food: Include the cost of your meal plan, if you have one, plus any meals you plan to prepare yourself (even if it's instant ramen or cereal). Don't forget snacks, takeout and any restaurant eating you plan to do.
  • Textbooks and school supplies: If you need one, budget for a computer or tablet for your first term.
  • Utilities and internet: These may be included in your campus housing or off-campus rental cost: Check to make sure.
  • Transportation: You may be eligible for student discounts on public transportation. If you're bringing a car to college, factor in car payments, insurance, registration, gas, repairs and maintenance.
  • Personal items: You can't go four years without buying shampoo or deodorant: Don't try it. You'll also need haircuts, toothpaste and—when you move in—bedding, trash bags, laundry detergent … the list goes on.
  • Entertainment: Many campuses host free events throughout the year. Even so, factor in any concerts you might want to attend, plus movies, sports you like to participate in, and so on.
  • Travel: This includes travel to and from school, as well as any extracurricular trips you hope to take during spring break or holidays.
  • Clothing: Remember that if you're moving to a new climate, you'll need at least a few new items so you won't freeze or swelter.

Also, think about how you will handle unforeseen expenses. Do you have an emergency fund you can add to regularly? Can your parents back you up financially if you have unbudgeted expenses? Would a credit card for emergencies only be helpful?

Track Your Spending and Income

Understanding your income and regular expenses is half the battle. The other half is actually implementing your budget in real life. Your budget will do you no good if it's not adhered to. As part of your budgeting process, think through how you'll track your income and expenses as the year unfolds.

You can use good old pen and paper to keep track of expenses and/or create a simple spreadsheet that shows your income and expenses. You can also use your online banking app to stay on top of transactions. Checking your account activity frequently for fraudulent charges is a good idea anyway.

You might also consider using a personal finance app or tool to track income and spending. If you have a free Experian account or sign up for one, you can use Experian's free personal finance tool to track your spending across multiple accounts. The tool even categorizes your transactions so you can easily match your spending against your budget. Depending on where you do your banking, you may have access to personal finance features built right into your bank's website or mobile app.

Curious about your options? Learn more about tracking expenses and the tools that make it easier.

Fine-Tune Your Budget and Stick to It

Now that you know your expected income and expenses—and you have a strategy for tracking your spending—you are the proud creator of a budget. Your goal moving forward is to make sure your income is adequate to cover your planned expenses. If, after living with your budget for a month or two, you find that your budget doesn't work, go back and look for opportunities to either dial back expenses or raise your income.

A few tips to keep in mind:

  • Your expenses during the first month of school may run a little high. That's because you may need to purchase items you took for granted when you were living at home. It may also be that you've never had to mind your spending this way.
  • Be prepared to make potentially painful adjustments. Saying goodbye to spring break in Florida and twice-daily trips to the coffee bar may be difficult, but it can save you from financial turmoil, or the need to come up with additional funding to bridge the gap.
  • Successful budgeting is all about recovery. Occasional overspending is a fact of life. As long as you can figure out how to account for it—and you don't miss any essential payments like rent or tuition—you'll be fine.

In the end, budgeting isn't a matter of sticking rigidly to an ideal set of numbers. It's more a question of creating parameters you can comfortably live within; guidelines that let you know when and how much you can comfortably spend at any given time—and still be able to cover your necessary expenses.

If you're having a difficult time making your budget work, or you're concerned about what will happen if you have unexpected expenses, now is a great time to talk to your parents or get help from a school counselor. Ideally, a budget should help you alleviate your stress about money so you can focus on becoming the educated, independent adult you want to be.

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