How to Budget as a College Student

College is an exciting step toward building the future you want. It’s also a hectic time. You’re managing money while you juggle classes, work, and everything else. It’s not particularly easy, paying for school and trying to stretch every dollar while you pursue your degree. 

But there’s a benefit you’ll probably appreciate later. If you learn to handle your finances now, it could make the rest of the journey feel more manageable and less stressful. And you’ll gain a valuable money management skill you can use for years to come.

Nearly three-quarters of people who get a bachelor's degree have student debt by the time they graduate, studies show. And those student loans could be tough to manage once it’s time to pay them off.

That’s why it’s so important to budget carefully as a college student. You may have to take out student loans to finance your education. If you’re cautious with your money, you may be able to avoid racking up additional debt in the course of getting a degree. 

Here are some tips for budgeting as a college student.

1. Know Your Expenses

Your primary expenses as a college student might consist of tuition, fees, room and board, books, and other supplies for your coursework. You may also have other bills to cover. 

If you have a car, you may be looking at a car payment, insurance, gas, and maintenance. If you live off campus, in addition to rent, you’re probably paying for different utilities. And whether you drive to school, live in a dorm, or have another living arrangement, you most likely have a cell phone bill. 

Get a handle on your expenses and know where your money is going. Keep a running list of your expenses and what they cost. And be sure to update that list as your costs change. For example, if your car insurance goes up or you find a cheaper cell phone plan, your budget should reflect that.

2. Separate Needs From Wants

About two out of five college students have credit card debt. Nearly half said they got into credit card debt for nonessentials, such as shopping, meals out, and impulse buying.

If you want to avoid—or at least minimize—credit card debt during college, know the difference between needs and wants. That way, you can prioritize your essential expenses and aim to spend less on the things you can technically do without.

As a college student, your needs might include:

• Tuition, fees, books, and supplies

• Room and board/rent and food

• Transportation

• Communication tools like a cell phone and internet service

• Medication

Cable TV and extra clothing may be nice to have. If the only way to pay for them is to charge them on a credit card or use Buy Now Pay Later, it's best to keep those purchases to a minimum. Getting into a cycle of using cards or BNPL for purchases you can't afford could create dangerous financial habits.

The point isn’t to avoid spending on extras altogether. It’s unreasonable to think you’ll never go out with friends during college. But if you’re accumulating credit card debt to maintain a social calendar, it may be time to cut back or get creative. You could, for example, suggest a movie night in your dorm room or apartment instead of going out to the movies. 

3. Figure Out How Much Money You Have to Work With

While in college, you may have money coming in from a few different sources. These could include:

• Student loans, grants, or scholarships

• Parental support/contributions toward your education and bills

• Earnings from a steady part-time job

• Money from a side hustle or occasional gig work 

Get a grip on how much income you have at your disposal each month. That way, you can spend on your most essential needs and decide whether you need a job if you don’t have one already.

For example, your student loans may only cover tuition, fees, and room and board. You might need a part-time job to pay for your cell phone and the occasional pizza. 

4. Save What You Can

If you’re working, you might have that money earmarked for extras—expenses like a spring break getaway with friends or restaurant meals to get a break from the usual dining hall grub. Even so, dedicate at least a small portion to an emergency fund if you’re able to do so. Even a monthly $5 or $10 could help build up a cash cushion. 

An emergency fund could come in handy in months that have some extra expenses, like a car repair. It could also help you avoid debt if you lose your job and have a hard time finding a new one that fits your class schedule. 

5. Keep Track of Your Debt

Some amount of debt may be unavoidable while in college. You may have to take out student loans to cover tuition, and you might need to rely on a credit card for unplanned bills.

Keep track of your debt and understand how much money you’re borrowing. It’s also key to know when your various debts are due so you’re not late with your payments, since that could damage your credit score and result in late fees.

You may have to make payments on your student loans while you’re still in college if you have private student loans. Check your loan documents so you understand your payment schedule.

To avoid racking up credit card interest, pay the entire balance every month. If you can’t do that, at least pay the minimum to maintain your credit score. And if possible, pay a bit over the minimum. That will help you chip away at the balance, and you’ll save on interest. 

Take Control of Your Finances

As a college student, you’re probably focused on doing as well as you can academically. But you should do your best to take control of your finances, too. Budgeting carefully as a college student could help you graduate with more savings and less debt, making it easier to transition into the working world.