Even if you intend to take as few math courses as possible at a university, you really can’t get away from it: Budgeting in college is like one of those math word problems come to life.
If you’re starting the next rung of higher education soon, you’ll want to start thinking about how you’re going to make your money last through the semester or year. Or if you have college-bound kids, you’ll want to offer them these budgeting tips:
— Use a spreadsheet.
— Make a comprehensive list of monthly expenses.
— Don’t be overly optimistic with your budget.
— Think beyond college textbooks.
— Avoid fast food.
Use a Spreadsheet
Sure, you can go old school with a pad of paper and a pen, or type up your budget in a Word document. But you can’t go wrong with a budgeting spreadsheet. Debika Sihi, an associate professor of business at Southwestern University in Georgetown, Texas, recommends Excel or Google Sheets.
“Actually seeing different line items like rent, tuition, favorite sandwich shop, car insurance payment — favorite sandwich shop again — is useful to understand spending in different areas of a student’s life,” Sihi says.
She says that with a spreadsheet, you can easily update it with “a pay raise or an increase in rent.” Plus, being able to look at the big picture “allows a student to identify trade-offs that may be necessary among the different spending categories,” Sihi says.
It’s worth a shot, at any rate. It takes some time to create a budget and to stick to it, but it’ll teach you good money management habits, Sihi says.
“I have students who have been successful in paying off student loans just a few years after graduating from college or saved enough of their income to put toward the launch of their own business,” she says.
Make a Comprehensive List of Monthly Expenses
This should be a long list — if it’s short, you’re probably missing some expenses. Hirsch Serman, founder of Lifecycle Financial LLC, a financial coach and certified public accountant in Chicago, offers the following examples to figure into monthly expenses:
— Housing. If opting for off-campus housing, factor in monthly rent and utilities.
— Textbooks. Serman recommends renting college textbooks. Students may rent by the month or for an entire semester, depending on the service.
— School supplies. This could include everything from calendars and organizers to pens, highlighters and workspace supplies.
— Transportation. Factor in gas, bus fare and costs for ride-sharing apps.
— Meals and groceries outside of a campus meal plan. If living in the dorm, be sure to factor in snacks and restaurant meals. If off campus, create a grocery budget.
— Entertainment and activities. This could include membership fees, movies, concerts and so on.
— Coffee money. Grabbing coffee with friends is a social event, Serman says, “and a conversation on how to handle this on the cheap is important,” he adds.
— Clothes. Depending on how often a student purchases new clothes, this may be in a monthly budget.
— Internet, phone, cable or streaming services. This might include a student’s monthly cellphone plan.
Bedding and other items for the dorm or apartment may need to be on your list of expected expenses, Serman says, although those are probably not going to be monthly costs.
Don’t Be Overly Optimistic With Your Budget
Valerie Clem-Brown, director of financial aid at William Peace University in Raleigh, North Carolina, says the most common errors students make when budgeting are underestimating expenses and not budgeting for variances.
“When a student is trying to decide if they want to live on campus or off campus, they often create a budget that is stiff and doesn’t allow for monthly variations,” Clem-Brown says. “Whether it is an electric bill that will fluctuate depending on the season or gas to get to and from school, students often do not plan for costs to change over the nine to 12 months they are budgeting for.”
In other words, students need to be less optimistic that they can get by on the lowest amount. Clem-Brown says she sees that a lot.
“For instance, when budgeting for groceries, I had a student tell me that it only costs a couple of dollars to make a pot of pasta that they could eat on that for a couple of days,” she says. “While that is true, it is not feasible — and definitely not healthy — to plan a grocery budget around the absolute cheapest possible options.”
Clem-Brown also suggests students plan for something to go wrong in their budget.
“A month of below-average temperatures in the winter can substantially change an electric bill and potentially throw a wrench into a carefully crafted budget,” she says.
Think Beyond College Textbooks
Robert Farrington, founder of The College Investor LLC, which runs a personal finance website aimed at people trying to kill off student debt, raises a good point.
“Students need to remember that there are sometimes more supplies for classes needed than books — especially lab courses. In technology or engineering classes you may also need software. This can add several hundreds dollars more per semester. Make sure you plan for it,” Farrington says.
Avoid Fast Food
Well, try. Do your best.
Katie Lee is a recent graduate of Barnard College in New York City and now works at Hatch, a fintech startup for small businesses.
“The No. 1 thing I wish I’d known was just how expensive food, even cheap food, ends up being,” Lee says. “Take coffee runs for example. Your roommate asks if you want to grab Starbucks before heading to the library, and it’s only $5 to $10, so you go. But then someone else wants to grab dinner, and there’s a diner in town, plus a CVS so you get some snacks, too. And then you end up at Taco Bell late at night, and that’s another $10. Then rinse and repeat, and before you know it, you’re spending $350-plus per week on food that’s really just junk, which could be a full paycheck if you’re working a minimum wage job like I was.”
She adds that that doesn’t include drinks or Ubers and Lyfts on the weekend.
“My advice is, if you can, just stick to the dining halls and save up your money to go somewhere good,” Lee says.
And if you can’t stick to the dining halls — plenty of college students don’t live in dorms, or move out after a couple years — you at least need to budget for all of that junk food.
Because if you don’t do those math word problems now and figure out what college life will cost you, you really will have a problem.
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Update 07/28/21: This story was published at an earlier date and has been updated with new information.