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 chapter 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 to ease the transition:
— Have a money talk.
— 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.
— Bank smart.
— Tools to create a college budget.
Have a Money Talk
If you’re a college student or a parent, you might think everything has been worked out, especially if there’s a meal plan already paid for. But you’ll be surprised at the expenses that can come up. There will be social activities to spend money on, such as late night pizza runs, and it’s also likely that there will be other recurring expenses such as haircuts, Uber rides, laundry and basic necessities like toothpaste. You name it, you or your college student will end up paying for it.
There may not be a lot of daily expenses, but week to week and as the months go by, there will be money disappearing from somebody’s bank account. Parents and students need to figure out where that money is coming from — financial aid? A savings account? Will the student have a job? Will the parent foot the bill? If the parent is footing the bill, are you putting expectations in place so your kid doesn’t empty your bank account? Discuss these possibilities and have a plan before you or your kid goes off to college.
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 economics and 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, a Chicago-based financial coach and certified public accountant and founder of Lifecycle Financial LLC, 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 and editor-in-chief of The College Investor, 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 Coinbase, an online platform for buying, selling, transferring and storing cryptocurrency.
“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.
You’ll also want to be thinking about checking accounts and debit or credit cards. Hopefully this will come up in your “money talk,” but if it doesn’t, you need to discuss this soon. If you don’t have a bank account, it’s probably high time that you got one. You don’t want to rely on prepaid cards, which often have fees.
Of course, banks sometimes have fees, too, and you’ll want to find a bank that doesn’t charge you much, or anything, to keep your money in your account. You’ll probably want to use whatever bank your parents use, and if you’re a parent, you’ll probably want to steer your kid to whatever financial institution you have. That can sometimes make it easier, when transferring money from your account to your kid’s, although with Venmo, PayPal, Zelle and other digital payment networks and apps, sending cash to your kid is getting easier and easier.
If you have a checking account and a job, you could look into applying for a student credit card. If you can find one that gives you cash back on your expenses every month, all the better. But if you go that route, you need to have enough money in your checking account, to pay off your credit card every month.
[Read: Best Budget Apps.]
Tools to Create a College Budget
If you’re still looking for ways to improve how you or your college kid budgets in college, you may want to check out some of the budgeting apps or spreadsheet templates that can help. Here are several you may want to take a look into: Mint, You Need a Budget, Google Sheets or your own bank.
However you work out how you’ll budget and pay for your day to day life in college, you’ll want to try and figure out how everything will work before you go to college.
As mentioned, budgeting in college is like one of those math word problems come to life. And if you don’t do those math word problems now and end up having to figure out the answers on a Friday night, perhaps when you’re off campus and in need of an Uber and utterly broke, you really may have a bigger problem on your hands.
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Update 06/29/22: This story was published at an earlier date and has been updated with new information.