When you’re in school, it can seem like all your money is going toward tuition and books. Still, it’s essential to learn how to budget as a college student.
You may not have a full-time job yet, or even know your major, but managing your money early on could help you save for spring break, uncover monthly savings, and avoid taking out additional student loans.
Here’s how to get started.
4 Steps to Create a Budget in College
Step 1: Calculate Your Income
When it comes to budgeting in college, a good first step is figuring out how much money you actually have to spend. To do this, add up your income. This may include student loans, scholarships, a part-time job, or contributions from your family.
It’s a smart idea to revisit your income regularly, such as at the start of each term. That way, if you’ve switched jobs, had a change in your financial aid package, or received a windfall from your parents, you can adjust the budget accordingly.
💡 Quick Tip: SoFi offers low fixed- or variable-interest rates. So you can get a private student loan that fits your budget.
Step 2: List Your Expenses
If you’re new to learning how to budget as a college student, there’s a little homework involved in figuring out your spending habits. If you’re game for this task, take an evening to list all of your college-related expenses and their cost each month. Then categorize each expense as either “necessary” or “fun.”
Necessary expenses are essentials, like rent, utilities, books, tuition, food, and gas. Fun expenses are related to entertainment — think dining out, bar tabs, tickets to athletic games, travel, or clothes.
You may also want to consider making room in the budget to build your savings. Double-check if any of your student loans have interest that needs to be paid immediately. Even if interest payments are deferred, it’s smart to start paying down student loan debt now. After all, every little bit helps.
Step 3: Choose a Budgeting Method
There’s no one-size-fit-all approach to budgeting for college students, and it may take some trial and error before you find the type that works for you. Here are some popular budgeting methods you may want to explore:
50/30/20 Budget
In the 50/30/20 budget, you allocate 50% of your after-tax dollars to “needs,” 30% to “wants,” and the remaining 20% to savings.
Recommended: See how your money is categorized using the 50/30/20 rule calculator.
The 70% Rule
The 70% Rule is similar to the 50/30/20 budget. Here, you allocate 70% of your after-tax income to living expenses, 20% to paying down debt or — if you have no debt — to savings, and 10% to whatever you wish.
Zero-Sum Budget
The goal of a zero-sum budget is to assign a purpose to all of your monthly after-tax income. Start by assigning dollars to each of your required bills, like rent, groceries, or student loan payments. Then figure out how much is left over for discretionary spending and saving, and assign where exactly that money is going.
Pay Yourself First
The premise of “pay yourself first” is simple: Assign money for savings or other financial goals, and spend the remaining money however you wish.
Envelope Budget
Each month, take out a set amount of cash to spend in each budget category, such as “groceries” or “transportation.” The money is stored separately in different envelopes, which you draw from when needed. (You can also adapt this budgeting method to use your debit card — just be sure to keep track of your spending.)
Line-Item Budget
A line-item budget can help you keep track of monthly expenditures. Using a spreadsheet or a pencil and paper, simply list your income for the month (or school term, if you’d prefer). Then, list each expense you have during the month. This allows you to see your income and cash that’s flowing out. If you’d like to see how your current spending stacks up, you can include a list of past expenses.
Shared Cost Splitting
If you have a roommate or are living with a partner, you split shared monthly bills right down the middle (or whatever percentage you both agree on). Each person pays their part.
Need help keeping track of your finances? Online tools like a free budget planning app might come in handy.
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Step 4: Set Up a System to Track Your Budget
There are at least three good ways to help you budget in college:
• Whiteboards
• Budget-tracking apps
• Spreadsheets
All three methods work similarly. You’ll record your income and expenses for the month. At the end of the month, you’ll look back on how much you brought in and how much you spent so you can make adjustments for the next month.
A whiteboard works particularly well if you have roommates and split your bills. It helps keep everyone accountable and serves as a good reminder to pay your bills on time. In the whiteboard scenario, you can record what you spent for the day, and update your totals every day. It’s best to put the whiteboard in a spot where you can see it, such as by your desk or on the fridge.
A budget-tracking app on your phone lets you take your budget on the go. Budget apps can link to your bank and credit card accounts, so every time you make a transaction, the app automatically records it.
You can set up your budget by adding new categories, and maybe allow notifications so you get a warning when you’re close to going over on your burrito budget.
You can also learn how to budget in college by making a simple spreadsheet. Build a virtual spreadsheet with Google Sheets or Excel, using a new tab for each month in the year so you can separate monthly expenses.
This method is more manual than an app, requiring you to look at your bank or credit card statements and manually record each transaction in your budget.
Tips for Sticking to Your College Budget
Managing your money as a college student doesn’t have to be overly complicated. Here are some ways you can live within your means:
• Build a financial cushion into your budget.
• Overestimate your expenses — and underestimate your income.
• Take advantage of free events in your area.
• Save on food by cooking your own meals.
• Set financial goals each month or school term to help you stay focused and motivated.
💡 Quick Tip: Need a private student loan to cover your school bills? Because approval for a private student loan is based on creditworthiness, a cosigner may help a student get loan approval and a lower rate.
The Takeaway
If you’re in school and are new to taking financial ownership, you might not know how to track income and expenditures — or want to. But learning how to budget money in college could help you afford to eat more than ramen, lessen debt, and maybe even spot ways to save money.
Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.
FAQ
How do I set up a basic budget?
To create a basic college student budget, start by listing all your sources of income, including financial aid, earnings from a part-time job, and family contributions. You can divide this amount by the number of months you need to make the money last; this is how much you have to live on each month. Next, write down all your necessary expenses, such as rent, transportation, and groceries. Subtract your fixed expenses from the monthly spending allotment. Whatever is left over can be used to cover non-essential expenses, like dining out, travel, and buying clothes.
What is a 50/30/20 budget for college students?
In this type of budget, you assign 50% of your after-tax dollars to fixed expenses, such as rent, food, utilities, insurance, and car and student loan payments. Next, allocate 30% of your money to variable expenses, like travel, dining out, and entertainment. Finally, set aside the remaining 20% to savings.
What tools can college students use to manage their budget?
There is no shortage of options when it comes to tools to manage a budget. A budgeting app, spreadsheet, or even a pen and paper can all do the trick. Your bank may also offer budgeting tools.
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