How to Create a Budget for College Students
Going to college can be expensive, which is why having a comprehensive budget for college students is so important. Without a solid budget, your student could struggle to make ends meet, making their time in school less comfortable and more stressful.
Luckily, a college student budget can help your student avoid financial hardship. While the planning process isn’t unlike the one used for a household budget, there are some unique considerations and expenses college students need to factor in that many families don’t. With that in mind, here is what your student needs to know about how to budget in college.
What is a Typical College Budget?
While many budgets for college students address similar kinds of expenses, each one is unique. Some factors only apply to your student, so relying on an average college budget as a guide may not be ideal.
For example, nearly every typical college budget needs to address tuition and fees. However, other costs, like housing, food, and transportation may or may not be a factor for your student.
If your student needs to create a budget for college students but is living at home while they are in school, then their housing and food costs may be covered by their household. Their college student budget will differ dramatically from those created for students who live on campus or off-campus on their own, so following a typical college budget template might not fully suit their situation.
Before your student creates their college budget, they need to consider which categories apply to them. Here is an overview of common college student budget categories:
- Tuition and fees
- Textbooks and supplies
- Computers, software, and equipment
- Room and board
- Transportation (anything from bus passes to gas and maintenance for a vehicle to parking passes)
- Clothing, shoes, and accessories
- Personal care (everything from grocery store items – like shampoo, toothpaste, and laundry detergent – to haircuts)
- Discretionary spending (entertainment, social activities, and travel)
- Emergency savings
- Bill and debt payments
Not every student will need to plan for all of the categories above. Additionally, some may need to add more categories to their college student budget based on their unique needs and situation.
Ideally, your student should sit down and consider what they need to spend money on and determine if it fits into an existing category. If not, then adding a new one to the list is wise.
How Do You Factor in Different Money Sources for a College Budget?
Another aspect of creating a budget for college students that can vary from one person to the next is the source of their money. Students who are relying solely on financial aid and scholarships will need to use a different approach than those who will also be working while they are in school. Similarly, parental contributions could impact their college budget as well.
Why would you need a different style of budget for college students based on the funding source? To put it simply, it’s because of the delivery schedule for the money.
For example, financial aid – like student loans, government grants, and institutional scholarships – is usually delivered in a lump sum every semester or quarter. Private scholarships may release funds every quarter or semester as well, though they could also be given just once a year.
If your student is working, they could be receiving an influx of money every two weeks, twice a month, or once a month. If they are freelancing to earn some cash, then their pay schedule could be incredibly unpredictable, depending on the kind of projects or arrangements they make.
Parental contributions could be set on nearly any schedule. For instance, some parents may send their college student a little cash on each of their paydays. Others may choose a different approach.
If your student has a 529 plan, then the timing of any withdrawals could also impact how they need to budget. Since 529 funds need to be spent during the same calendar year as the withdrawal in most cases, many opt for a semester- or quarter-based schedule, allowing qualified expenses to be covered as they come due. Essentially, this allows your student to budget the money as they would with financial aid disbursements, creating a level of consistency.
Ultimately, your student needs to consider their money sources to create a functional college budget. If you intend to provide some financial support, then sitting down with your student to assist them with their college student budget is wise, ensuring you both understand when money will be provided and how it will be delivered so that it can be properly factored into the budget.
How to Create a College Budget for Students Using Financial Aid, Grants, and Scholarships
In most cases, non-working students are going to rely on cash influxes at the start of each quarter or semester. Whether it is financial aid, grants, or scholarships, they typically receive their money near the beginning of those periods.
First, your student needs to factor in how much of the money will be spent at the start of the semester or quarter. For example, tuition and fees, room and board, and textbooks and certain supplies may need to be handled right at the beginning of each school period. This means they are making several large payments a few times a year, and these usually have to be addressed before they spend money on anything else.
With financial aid and some scholarships, the funds are sent to the school to cover mandatory expenses immediately. Then, the student only gets the remainder after these costs are addressed. This actually simplifies budgeting to a degree as they don’t have to manage those payments personally.
As they create their college student budget, they need to consider how many weeks or months the remaining money needs to cover. Then, they can divide the lump sum they are receiving by that number of weeks or month, giving them an idea of what they can spend over time. Finally, they allocate a chunk of the money to each category, based on their needs.
However, it is also important they factor in any restrictions associated with the money as they create a budget for college students. Certain forms of financial aid and some scholarships can only be spent on specific qualifying expenses. This means your student can’t allocate those funds to a non-eligible expenditure, so they need to examine any conditions associated with the money as they plan their budget.
How to Create a Budget for College Students Who Work
A college budget for students who work may vary slightly from the approach above even if they are receiving financial aid, grants, or scholarships. While using the process in the previous section serves as a strong baseline for a college budget, if your student is going to earn income while in school, then they need to go a step further.
First, your student needs to consider their pay schedule. Students who get paid biweekly will need to budget differently than those who receive their money twice a month.
Second, your student has to estimate the size of their paycheck. If their hours may be unsteady, resulting in different payment amounts for each period, then it is best to underestimate their take-home pay than to be too optimistic. That way, they are planning for the hardest scenario they may encounter.
At this point, your student can anticipate how much money is coming in and when it arrives. They can review their known expenses and allocate those funds to each category.
How to Create a College Student Budget with Parental Contributions
Factoring in parental contributions is not unlike addressing work-related income. You will need to sit down with your student and discuss when any financial assistance will be provided, allowing them to factor that into their planning.
If you intend to provide some help at the start of each quarter or semester, then your student can use the same process as they do for financial aid and scholarships. If you are aligning it with your payday or sending over some cash each month, then your student can use the work-related income approach.
While setting up a budget for college students takes some time and energy, it is critical. It serves as a guideline and will help your student monitor and track their spending, ensuring they can make ends meet. Otherwise, your student could end up struggling financially, making college much more stressful than it has to be.