How To Create A Monthly Budget For College Students

Are you looking for how to create a monthly budget for college students? We will share with you tips and strategy you can use to create the best budget plan.

So, you’re leaving for school soon and the money aspect is starting to stress you out? Maybe you’re wondering what a typical college student budget is? Or about how much the average college student spends on personal expenses and if you’ll have enough?

Then you’re in the right place. The more informed you are about your finances, the less likely you will be to be shocked down the line. The number of people who graduate with an insane amount of debt that they will be paying back for decades is astronomical! Creating a budget can be daunting, but it doesn’t have to be. We will break it down into easy steps that anyone can follow!

This post is a step-by-step plan on how to create a monthly budget for college students.  

How To Budget For College Students

The first step is to figure out your annual income for the school year. Start by writing down every single source of income that you know you will have. This includes:

  • Any money you have saved from a job
  • Scholarships
  • Loans
  • Grants
  • Money from your parents
  • Registered education funds
  • Jobs
  • Passive income

For example:

$8000 saved from working full time in the summer

$3000 scholarships

$2000 in grants

$10,000 in loans

 $2000 dollars from your parents

$25,000 total

Then add in any predicted monthly income from part-time jobs that you will have during the school year. (If you haven’t landed a job yet, leave it out for now and come back to it in step 3!)

For example, if you estimate working 10 hours a week at 12$ per hour, that would be:

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10 hours x 12$/hour x 30 weeks per school year conservatively= $3,600/year.

Next, add these 2 values together and you have your total income for the school year.

$25 000 + $3600 = 28,600

Total monthly income = $28,600

Step 2: List Your Annual Expenses

The next step is to list your mandatory annual expenses. These are the basic necessities and the costs that you can’t avoid. Some expenses that should be accounted for include:

  • Tuition
  • Books/other materials
  • Food (meal plan, groceries)
  • Housing (rent, utilities, internet)
  • Transportation (car, parking pass, insurance, bus pass)

Now, this is going to be very student-dependent. I would recommend looking at your school’s website to get a gauge of each of the expenses listed above as they will vary significantly from school to school.

Here’s an example:

$12000 tuition

$1500 books/materials

$4000 meal plan

$8000 housing

$2000 car insurance /gas/parking pass

$27,500 total

Total annual expenses = $27500

As you can see the costs add up quickly, and unfortunately some of these costs will be more within your control than others.

Step 3: Figure Out The Difference Between Income And Expenses

Next, take your income and subtract your expenses.

If you have a positive value that’s great! It means that you have enough money for the next year of school. Take this value and divide it by the number of months for your school year and that is how much money you have every month to allocate to discretionary spending and savings.

Using the example above, income = $28600 and your expenses = $27500, which leaves a surplus of $1100 that isn’t accounted for during the year. That’s 137.50 per month during an 8-month school year ($1100/8=$137.50).  This is the amount you can spend on entertainment, experiences and ideally saving! The goal is to find a healthy balance, that lets you enjoy your college experience while still planning for the future.

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Putting away even a small amount of money each month is a great habit to get into! Have you heard of compound interest? It means that the earlier you start saving, the more time your money has to make money for you, with no extra work!

If you notice that the value is negative, that means that you are in a deficit and won’t have enough money for the school year. if this is the case, then I totally get how stressful that can be, but you do have options!

Step 4: Make Adjustments

If you have a negative balance you can adjust your income, your expenses or both!

First, you can see if there’s any way to increase your annual income. See if there are any scholarships you qualify for, or if further financial aid is an option. Definitely keep in mind that any loan you take on will need to be paid back down the line, so keep an eye on interest rates. Alternatively, you can start working on building up a side hustle or passive income stream now before school starts.

Next, see if it’s possible to decrease your expenses.

Unfortunately, if you’re living on campus, you may not have the option of opting out of the meal plan, but if you do it’s definitely something you should consider because you could save a ton of money. If you do choose to go this route though, I would recommend learning so easy to make some easy meals prior to getting to school that way it’s not an added stress once you get there. Learning to cook is definitely something I wish I had done before I left for school! By the end of my first year, I had had enough frozen meals to last a lifetime!

Another option is not committing to student housing, but opting to live off-campus in cheaper accommodations. The social aspect of student housing is definitely great, but alternatively, if you choose to live off-campus you can join clubs and activities that interest you, and make friends that way instead.

Or maybe you realize that you don’t actually need a car and you can cut out insurance and gas costs and take the bus everywhere. There are so many options to cut down on expenses you just need to get a little bit creative!

If none of these options work, there are tons of people that take a gap year or two so they can save. The idea of falling behind your friends may seem terrifying, but I promise that taking a year or two now seems like a way bigger deal than it will in the future. Also from what I observed, the friends that I made that took a gap year to save tended to be more motivated to attend and do well in classes. It’s a lot harder to cut classes when you’ve worked painstakingly hard to make sure you’ll be able to afford them!

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This method of calculating out how much money you’ll have and accounting for where every dollar will go is something called zero-based budgeting.

You may be looking at your budget and wondering how well you stack up against other college students?

How much does the average college student spend on personal expenses per year?

On average you can expect students to have a discretionary income of approximately $100-200 per month. This can be used for entertainment costs, shopping, dining out etc.

Obviously, there are outliers to any average. So, while you’re in school you may notice people that some friends seem to have an endless source of money while others are working 2-3 jobs and barely making ends meet. Everyone’s journey is a little different, but you’ll probably find it a lot easier to stick to your own budgeting goals if you’re surrounded by like-minded individuals.

But the fact that you’re reading a post on how to create a monthly budget for college students means that you’re probably already ahead of the curve!

Step 4: Do A Self-audit

So, you’ve started school? Congratulations!

Make sure to enjoy the experience… and also make that you’re staying on track with your budget! It’s easy to get a little swept away right when you get to school and spend more money than you realize.

Having a budget is only half the battle, sticking to it is a whole other battle. The last thing you want is to run over budget all year just to realize that you can’t afford groceries next week right around the time when exams are starting! That’s a whole other set of stressors that you can avoid.

After your first month, check on your transactions. Make a list of every single dollar you had coming in and going out. Are you on track? Can you save a little more this month? Did you go over budget? It definitely happens sometimes which is okay as long as you don’t let it become a pattern and can balance it out in a future month.

Repeat the same process for the next few months until you are positive that you have a handle on everything. Budgeting is a very personalized process and the more you get to know your habits, the better you’ll be able to plan. Although it may seem like a chore now, over time I gradually learnt to enjoy the process and I hope you will too! Happy budgeting!

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