The cost of college is no joke. And though it varies state-to-state and from school to school, tuition alone increases every year by 8%. This equates to the cost of college tuition doubling every nine years. Not to mention the additional and unavoidable costs of room and board, books, supplies, and other college fees. Then you have personal expenses such as phone bills, food, internet, transportation/rideshare, beauty/drugstore needs, entertainment to deal with…and we both know the list could go on. It does go on.
With all of this put into perspective, one is left to wonder:
How much does the average college student actually spend throughout their college life? How about year to year? Or month to month?
I presume the numbers add up all the same, but let’s bring it closer to home anyway. College Student Spending Statistics and Facts show that, on average, college students spend between $1400-$2000 a month on “wants” and “needs,” which is considered to be “moderate” spending. Of course, there are disparities in the amount college students spend here in the U.S., but having this information clarifies your own spending habits. It also sets a premise for where you can start when evaluating your own spending habits and making the right decision to put a budget in place.
In this article, we will cover why budgeting your money in college is important, how to create a budget for yourself while in college, and how to ask your parents to help you budget. We will also provide you with useful budgeting definitions and books and other resources to help you learn about budgeting. Here goes!
Why Budgeting Your Money in College is Important
Let’s get down to it. Expenses for a college student can get scarily out of hand. Just ask your parents. They were once in your college dorm shoes trying to decide between a night out with friends or buying two days worth of groceries.
These days, the financial struggle for college students is even more real, with some having to make the tough decision between going to class or to their job. In that extreme instance, our bet is that you or that person you know reaches out for immediate help from parents and a family financial planner. If you are employed while in college, you should never have to make a decision that will compromise your academic progress and potentially your future career.
The above scenarios should give you cause to begin your budgeting journey today. Here are some reasons why budgeting your money in college is important:
- To avoid/overcome being a statistic. Based on the above facts, a lot of college students are in over their heads in expenses, and as a result, are forced to act in desperation just to get by. That’s no way to live. Work towards getting your expenses under control and you’ll find yourself with a little more extra money.
- You won’t spend money you don’t have. Instead of maxing out the only credit card you have in your name on nail polish changes at the spa and sports betting losses, set up a budget to save yourself the money and agony.
- Save for something greater. There’s always a smarter money choice to be made. Consider the things you “want” to be things you can do without. Cutting costs this way will relieve you of any burdens from inevitable bills, and will allow you to get closer to those things that once seemed too far within reach. It also helps you to have money that can be put aside for your future, which is a HUGE deal.
- Emergencies are covered. The unpredictable is bound to happen at any time, any day. Would you say you’d be ready for it when it does?…Bad call on the zombie apocalypse movie reference (with a finance twist), but I did get your attention. Whatever you do, don’t watch it on campus. When you’ve already prepared yourself with an emergency fund, you’ll have nothing to fear.
How to Create a Budget for Yourself While in College
Creating a college budget can be easy. It helps you manage your money, save for your future, and set yourself up for success.
Here are some valuable tips and tools to get started with creating a budget plan:
- Take note of what you earn AND how much you spend. Does it seem like you are spending more than what you are earning? Balance that out by reducing any unnecessary “wants” or expenditures.
- Your cash flow each month should be distributed into at least four categories: expenses, savings, donations, and pay back. Figure out a percentage of how your cash flow can be allocated to each. Be sure to put “needs” before “wants”. If you are relatively tighter on funds and don’t have the wiggle room to spread yourself as thin, focus on the expenses and savings.
- After you have your budget plan well thought out on paper, create a budget template for yourself, starting with the most popular and reliable tool in budgeting. Google sheets has over thousands of free budgeting template styles to choose from. Check out their Native Monthly Budget Sheet that’s used as an income and expense tracker.
- For those who prefer a smart-app, here’s a simple, user-friendly budgeting tool to try: Intuit Mint Budgeting App
- Make the budget and stick to it. At this point, you’ve crunched all of the numbers and put in the hard work. Sticking to a budget will give you ongoing financial stability and peace of mind.
- Consult your parents to get that second opinion. Have them view your budget plan to see if it’s accurate enough, or anything left out should be added. They can even hold your hand through it all. Don’t resist the support.
Budgeting Template for College Students
If you’re not sure how to get started organizing your expenses and income, download our free college student budgeting worksheet to help you get started.
How to Ask Your Parents to Help You Budget
If you secretly want to feel 12 years old again, or in other words – like somebody out there cares, then put your college student pride aside and ask your parents to get you started with budgeting, or at least with the math part. Their willingness to help will come from a place of good intention because what they actually want is for you to get to a point where you forget that they’re there to help.
This totally works out in your favor! Becoming financially stable and in control of your own life doesn’t happen overnight, so your parents should be a part of the process.
Now that you know there is nothing wrong with asking your parents to help you budget, start by opening up to them. Let them know that you recognize your issues with spending and saving and would like to reduce the amount you spend to get your finances under control and ultimately be able to save towards maintaining the “needs” and saving towards the future.
Budgeting Terms to Know
Here are some simple definitions for budgeting terms you should know as a college student.
- Budget: A plan for using income to meet financial obligations.
- Credit: A financial arrangement in which money is borrowed for a purchase and paid back at a later date
- Credit Report: A record of a borrower’s credit history
- Credit Score: A three-digit number that represents how likely a borrower is to repay a debt
- Debt: The money that a borrower owes to a lender.
- Emergency Fund: Money set aside for big, unexpected expenses
- Need vs. Want: A “need” is an essential expense, such as housing or food. A “want” is an expense that is desired but non-essential, such as a gaming system.
Budgeting Book Recommendations
Books have always been an incredible resource to use, whether young or old. The more you read, the more information you pick up that can help you to handle complex ideas and situations.
Here are some great reads centered on budgeting that are tailored to college students and young adults. Head over to our main money books for college students library for more recommendations!
- How to Adult: Personal Finance for the Real World by Jake Cousineau: An essential resource for a high school graduate, college student, or any other young adult who needs to prepare for the financial realities of adulthood.
- Broke Millennial: Stop Scraping By and Get Your Financial Life Together by Erin Lowry: A step-by-step, in your face guide on taking your financial life by storm, covering relevant topics such as in managing student loans and knowing what to do when you are out with friends and can’t afford to split the bill evenly. A must-read!
- Budgeting 101 by Michael Cagan: A safe and secure reference and essential guide to budgeting that will teach you how to manage your money now and in the future.
- It’s Not Common Cent$ by Aaminah Amin: This multifaceted help book touches on several areas of finance for college students, giving advice on how to become financially literate and build good financial habits in less than a month.