The Ultimate College Budget Guide [And Sample Budgets]


College budget guide

“Spend less than you earn” is a golden rule in personal finance. If you can follow that rule, you’ll avoid debt and build savings. But college students have a remarkably tough time following this rule, primarily because college tuition costs so much relative to the typical student’s income.

Since college student’s expenses are almost always higher than their income, budgeting may seem like a silly exercise. After all, you’ll take on some debt no matter what. The difference may seem insignificant when you’re taking out student loans. But when it comes to repayment, the difference is massive. You don’t want to be 44 years old and still paying for a Calculus 101 textbook and crappy beer.

Budgeting may not prevent all student debt. But it can help college students understand how income and expenses work together, so they can minimize their overall debt load. This college budget guide gives tips to get you started and provides sample budgets for different scenarios.

Budgeting As A College Student

Since the typical “spend less than you earn” mantra doesn’t always work for college students who have to cover large tuition bills, it can be tempting to ditch budgeting altogether.

However, that mindset can lead you to take on excess student debt, or even fall into credit card debt. This type of debt can hamper you as you begin your post-collegiate journey.

To avoid the mindset trap, I advise college students to break their expenses into two categories:

1. Tuition
2. Living expenses and fun money

Tuition isn’t something that needs to be covered by current income. You can use savings (yours or your parents), scholarships, or student loans to cover this expense. That’s not to say tuition costs don’t matter. They do. You don’t want to buy a $160,000 education when you can get the same value for $26,000. But the income source won’t be your part-time paycheck.

Living expenses should typically be covered by your income including savings from summer jobs and internships. As a college student, you likely have a lot of flexibility to keep most of your living expenses low. Doing so means you’ll have some room in your budget for fun.

Related: Best Budgeting Apps For Your Style

Managing Lumpy Income And Expenses

Many college students earn “lumpy” income. They may only earn a few hundred dollars per month during the school year. But then they may earn several thousand dollars when working full-time over summer break.

Managing this “feast or famine” style of income is difficult even for experienced money managers. To better manage this type of income, it’s useful to look at your income over the year and plan your budget that way.

If it looks like you don’t have enough savings to pay your living expenses for the full year, you may need to add a little bit of extra to your borrowing. Ideally, you’ll be able to offset any extra debt by taking out less the next year.

Budget Categories For Traditional College Students

At a high level, I advise that college students should break costs into Tuition and Fees and everything else. However, the categories below can provide some useful parameters for thinking about spending.

Since this is a breakout for traditional college students, you won’t see categories like taxes or child care in this breakout. Of course, if you have a child, or you’re self-employed, you’ll need to add those costs in as well.

Tuition And Fees

Tuition and fees are typically the number one line item for students. The high costs aren’t a problem if you have scholarships to cover the cost. However, students who struggle to find scholarships will want to consider lower-cost college options like attending a community college or choosing in-state schools.

Health And Medical

Many traditional college students will qualify for their parent’s health insurance plan. But if your parent’s insurance doesn’t cover you, you’ll need to budget for a low-cost plan.

Most of the time, a school will offer a low- or no-cost health plan for students. Just keep in mind that even with health insurance, you may need to pay copays for prescription drugs, visits to the doctor, or therapy sessions.

Related: The Cheapest Health Insurance For College Students

Rent And Utilities

Rent and utilities can eat up a large portion of the college student’s budget. Splitting an apartment (including sharing a bedroom) is a classic way for college students to keep costs low. But that isn’t the only option.

Students may live with family, take work as a live-in caregiver, house-sit, or find ways to house hack. All of those options can yield a super low-cost living situation.

Telecomm

You need a cell phone and WiFi to attend school and stay connected. But cell phone and internet bills can be astronomical. But paying too much for your cell phone plan isn’t a status symbol. Use one of these plans to keep your cell phone bill in check.

Transportation

As a student, you need to get from place to place. And that costs some money. Many college students combine bicycles, public transit, and the occasional Uber ride to meet their transit needs. Car ownership is a more expensive way to cover transit, but it can be a necessary cost.

Unfortunately, owning a car will typically eat up a big portion of a college student’s budget, even if the student drives a paid-off car. When you combine car repairs, insurance, and fuel, even inexpensive, paid-off cars can cost hundreds each month to drive.

RelatedThe Cheapest Car Insurance For College Students

Food

College food costs can be all over the board. Some students eat out all the time. Others take advantage of meal plans. Still others subsist on oatmeal and peanut butter. This is one area where you can probably be flexible with your spending.

Fun

During college, you may not have much money. But you’ll typically have a lot of time. So take advantage of opportunities to have some fun.

Take road trips, hike, study abroad, dance, listen to live music, goof off with your friends. Whatever you like to do, set aside some money in the budget for making it happen.

Textbooks And Other School Equipment

You may need to buy several textbooks or software programs to complete your coursework. Always look for low-cost ways to rent or buy the text, but make sure you have what you need.

Related: The Best Places To Buy College Textbooks Online

Sample College Budgets

The college budgets below are “sample” budgets for students living in a variety of situations. Some need cars. One needs to pay for her health insurance. All have different priorities and college situations.

Despite the variety of budgets, each student covers their living expenses and fun money during the year. They limit their debt to tuition costs alone.

For the most part, these students cover their living costs by finding higher-paying gig work during the school year. All four also work full-time (or even more than full-time) during the summer.

Community College Student Living at Home

Community College Callen is working to earn his associate’s degree from a local community college before transferring to the flagship state university to complete his degree. He drives a used pickup to school and work, but he still owes money on the vehicle.

During the school year, he works 15 hours per week as a lifeguard, earning $16 per hour. And during the summer, he manages a landscaping crew and earns $22 per hour for the full-time job.

Here’s a sample college budget for Callen:

$3,770 per year. After applying $650 in scholarship funds, this falls to $3,120 annually.

$450 annually covers a dental cleaning and a new pair of glasses. Callen’s parents have him listed as a dependent on their health insurance, but they don’t have dental insurance

$150 per month. Callen covers his family’s internet and water bill but otherwise lives rent-free.

$80 per month. Callen was savvy enough to find a low-cost data plan, but he financed a phone, so he has to pay $50 monthly for the phone. It will be paid off in two years.

$300 per month. Callen bought his older brother’s pickup and pays him $125 per month as a loan. The car will be paid off in 18 more months. The rest of the money covers fuel, insurance, and occasional repairs.

$200 per month. Callen mostly eats at home, and typically buys $25-$30 worth of groceries for the family. The remaining food costs cover his weekly (sometimes more) Chipotle habit.

$200 per month. Most of this is for concert tickets, a spring break trip to Mexico, and the cost of a few activities with friends.

Textbooks and school equipment

$700 annually. Callen uses a paid-for laptop but has had to purchase several textbooks and software packages to study for statistics, economics, and philosophy classes.

Total expenses including tuition

Scholarship Student Living On Campus At Private Liberal Arts School

Scholarship Sally has a scholarship that covers 100% of the tuition at her pricey liberal arts school. Since the school is in a small town, Sally works on campus at the library. She only earns $12 per hour at this job and works 8 hours per week.

She also does some online ACT prep classes and earns $40 per hour at this job working 4 hours per week on average. During the summer, she earns $15 per hour as an intern at a consulting firm on top of her tutoring. She doesn’t own a car and she lives with relatives during her internship.

Here’s a sample college budget for Sally:

$47,000 annually, but the entire expense including fees is covered through her scholarship. So her out-of-pocket cost is $0.

$200 annually. Sally’s parents cover health and dental costs. Her only out-of-pocket costs cover a low-cost prescription and one copay.

$5,700 annually. Sally lives in an on-campus apartment during the school year. During the summer, she will live with relatives while she completes her internship.

$215 annually. Sally has a paid-off phone and she uses Mint Mobile.

$50 per month. Sally rides a bike on campus and catches rides with friends who have cars. She pitches in for gas on longer trips. Her main transit cost is a public transit pass which she needs for her summer internship. This costs $210 for the summer.

$650 per month (average). Sally has an on-campus meal plan which costs $4,000 per year. She also buys groceries (around $50 per week) and cooks a few simple meals each week. Since Sally lives on campus, she limits eating out to weekends when she can easily catch a ride. During her internship, Sally will eat dinner with her relatives, and pitch in a few grocery items each week. At the investment bank, she’ll score free breakfast and dinner most weekdays.

$200 per month. This covers some camping equipment, and a few cover fees at bars to see live music. A lot of Sally’s fun expenses are outdoorsy experiences that cost very little. During her internship, Sally pays for a few happy hour drinks but works hard to find free and low-cost entertainment on the weekends.

Textbooks and school equipment

$2,000 annually. Sally needs a new computer, and she buys several used textbooks.

Total expenses including tuition

Public University Student Splitting Apartment With Friends

Public University Patricia attends the flagship university in her state. She has a few small scholarships and her parents are chipping in what they can to help her avoid overwhelming debt. She lives in an off-campus apartment that she splits with 3 other people.

Since she lives in the city, she doesn’t need a car. During the school year, Patricia earns around $300 per week working side gigs. She charges scooters, works with a catering company and flips thrift finds on eBay. During the summer, she continues most of her side gigs and she works 35 hours per week as a Nanny earning $18 per hour.

Here’s a sample college budget for Patricia:

$11,800 per year. But after scholarships and parental contributions, her cost is $8,000 annually.

$1,900 annually. Patricia pays $1700 for the Student Health Plan at her university. Thankfully, all on-campus visits are free. So Patricia only has to pay for a dental cleaning and a copay for a one-time prescription

$520 per month. Patricia splits rent and utilities four ways.

$215 annually. This student has a paid-off phone, and she uses Mint Mobile.

$1,300 annually. Patricia gets a free public transit pass through her university, and she has a bicycle for short trips around the city. However, she also uses Uber or Lyft several times each month to get around the city.

$350 per month. Patricia gets catering leftovers a few times per month and tries to stretch those by adding fresh fruits and veggies. Groceries typically cost $50 per week. The remainder of Patricia’s food budget is spent on a few nice dinners or bar tabs each month.

$300 per month. Patricia loves skiing and she buys an annual student pass ($799 per year) at the mountain 3 hours away. Most winter weekends, Patricia will attempt to enlist a family member or friend to head to the slopes with her. The rest of the year, she’s happy to hang out with friends, sample coffee around the city, and watch Netflix.

Total expenses including tuition

-$2,295 in debt annually (assuming all potential savings go towards tuition).

Public University Student Studying Abroad In Spain

Study Abroad Steve is living in a fictional world where COVID-19 doesn’t exist and is studying abroad in Spain. During his five-month stay in Spain, he won’t work. However, for the rest of the school year, he will referee an average of 10 soccer games per week, earning $400 per week.

During the summer, Steve earns $16 per hour working full-time as a janitor at a gym. He also continues to referee soccer games on the weekends. Steve owns a car in the United States.

Here’s a sample college budget for Steve:

$12,400 per year. After contributions from his parents, this falls to $9,400 annually. The study abroad slightly raises tuition, but the cost change is small due to a study arrangement with a partner university in Spain.

$300 annually. Steve’s parents cover his dental and medical expenses, but he bought a private health insurance plan for his time in Europe.

$600 per month. During his study abroad, Steve rents a room for $600. The rest of the year, he spits a house with five friends and pays $600 for rent with utilities included.

$20 per month. Steve uses ProjectFi, a low-cost cell carrier, to keep cell costs low both at home and abroad.

$300 per month. This covers fuel, maintenance, and insurance for Steve’s car. Steve stored his car with his parents during his study abroad trip and got a small break on insurance by characterizing it as a “non-driving car” during that time.

$200 per month. Steve keeps his food budget low by eating a lot of PB&J, beans, and bananas. Even during his study abroad, he kept his food spending quite low except what he categorized as fun.

$500 per month. Most weekends during his study abroad, Steve would take a train and visit another European destination. He often stayed in hostels and enjoyed free attractions (including wilderness attractions) during his stay. He typically ate 1-2 meals out during these excursions. Back home, Steve limited his “fun” spending to money spent on a few pairs of cleats and some athletic clothes.

Total expenses including tuition

Final Thoughts

Living like a college student doesn’t have to mean eating Ramen and studying in the library all the time. You can enjoy fun experiences, good food, friendships, travel (assuming it is safe), and necessities without taking on excessive debt.

One of the keys to having this fun without taking on accompanying debt is to find higher earning opportunities that will provide income to cover your lifestyle expenses. And the other key to this is to put pen to paper to figure out a reasonable budget.

Once you have the first draft of your college budget in place, it will be much easier to find the “pain points” where you may need to cut back. Be sure to check out our guide to saving money in college for more tips on how to cut costs while you’re enrolled in school.



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