While college costs continue to increase, students are becoming more creative on how to cut the costs associated with higher education. The most common financial troubles college students fall into are usually due to a lack of oversight. Making a realistic budget can keep your spending in check, as seeing a bill for a $300 weekend and how it will impact you at the end of the semester can be a sobering realization.
Find out now: What will it cost to go to school?
That being said, denying yourself a “learning experience” prevents one from broadening their horizons. So with that in mind, here are a handful of pointers that should be helpful in creating a realistic college budget.
Our tips are dependent on the following assumptions:
1) You are going away to college- Obviously commuting will keep expenses down, and you can adjust your budget accordingly.
2) You will live in the dorms for at least one semester- This is usually standard at every college across the country, and a crucial part of the “college experience.”
3) You understand how location impacts cost of living- The costs of living in Champaign, Illinois are vastly different than the costs of living in New York City. Adjust your cost projections according to where you plan to go to school
4) You will do everything you can to reduce your student loan debt- this means applying to scholarships, grants, work-study programs and whatever programs will help reduce your tuition. Minimizing the amount you owe at graduation will make the post-college transition much smoother. If you think it’s impossible, Joe Mihalic at No More Harvard Debt showed that paying off $90,000 in loans, with an MBA from Harvard, is still an absolutely grueling experience. He did it, but it wasn’t exactly fun.
5) You will create a budget for the entire semester, along with a breakdown of weekly budgets.
6) You will track your spending weekly based on the budgets you created. At the end of the semester, you can see where your projections fell short.
+ Income- Are you working while in school? Donating plasma? Painting houses? Have you landed a cushy paid internship? Plan out what you will make, after taxes, weekly, and UNDER-estimate what you will have at the end of the semester. While you may work extra shifts or pick up some overtime, more than likely you will be taking time off to study or go on trips.
+ Allowance- Do you have any scholarships? Are your family members sending you money? Look at those dollar amounts as “donations” and include them here. Scholarships can be rescinded or reduced for a number of extenuating circumstances, and so can gifts from mom and dad.
+ Loans- Keep this as a separate column, because you know better than anyone that you will have to pay this back, with interest. Always know, your creditors are watching you.
– Tuition– This gets you in the door. You will know this number at the beginning of every semester. If you pay in installments, put that down as well.
– Rent- Depending on your university’s location, rent can be where you can save a bundle or hemorrhage cash. Don’t be afraid to live in a small space with lots of roommates, the library is free to study in, and you will never see anything for that college rent money except the memories you make.
– Groceries- Learn where the deals are, get a membership to Sam’s Club or Costco, and eat as healthy as you can. Your future clothing budget will thank you, trust me.
– Social Budget (Necessary)- You need to make friends and go out during college. Your network of friends will serve you out in the real world, and you should be building those relationships. Plan for one big trip per semester, and a few nights out a week. If you don’t take that trip, you can use that money to do something else. BONUS!
– Social Budget (Slush Fund)- This is for any incidental social spending. Make a pledge to yourself that you will plan out this number when sober, and DO NOT SPEND MORE THAN YOU ALLOT TO THIS CATEGORY. Sometimes a party requires a costume, or you need tickets to concert that wasn’t scheduled until last week. Plan ahead for that.
– Books and supplies- Books are very expensive, and sometimes not found on Amazon or online bookstores. Leave some room for a few $100 books in your book budget. For art, architecture, and engineering students, special supplies are required for your classes. Some are expensive one-time purchases, some add up over time. Be aware, and read your syllabi as soon as they are available.
– Emergency- Things will go wrong. Have an emergency budget set aside, and carry it over to the next semester if you don’t use it. DO NOT spend this on a finals week party, you may find out you need something at the last minute.
– Transportation- Know the transportation deals around campus, whether they are free buses, safe rides, or bikeshares. If you are in a city and have a monthly bus pass, put those charges here.
– Getting home- See if there are any deals on how to get back home. Book tickets in advance, since everyone goes home at the same time, and don’t be afraid to carpool. Gas money split four ways is much cheaper than bus, train, or plane tickets.
– Car- If you have a car at school, put money aside to upkeep it. Oil changes, car washes, gas, and the occasional broken window or side view mirror. All of these things are common on a college campus. Plan ahead.
– Miscellaneous- Some people like spending money for a nice haircut. Some people need ten hooded sweatshirts with their university’s name on it. Think ahead, take inventory of your habits, and put money away in here for them.
– Credit Card Payments & Charges- I leave this for last. Most college students shouldn’t have a credit card. Many do. DO NOT fall for the credit card scams. The Credit Card Act has made college credit card recruitment less ridiculous than before, but they will still try and get you to sign for something.
Before you go to college, take a trusted adult with you to your bank and see what types of student credit cards they offer. Building credit while in college is important, but don’t go overboard. You can pay for many of these expenses on your credit card, but make sure to include ALL CREDIT CHARGES and credit advancements in this column. Seeing how much interest you paid to your credit card company can be very sobering.
Do your best to stick to your budget every week and every semester. If you fail the first semester, take what you have learned, and apply it to your budget the next time. Like everything else in college it’s trial by fire and you will learn a lot about yourself and your spending habits. Both of which will be invaluable out in the real world.
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