How to set up a budget for college expenses

In this article we’ll focus on some basic steps you can take to set up your college budget. This article will not focus on debt repayment. That is a different topic for another day.

We’ll break our article up into the following areas:

• Expected income
• Expected spending
• Habits
• Keep encouraged

Notes: For this article, we’ll assume that all numbers are after taxes have been taken out.

Expected income

The first step in setting up your budget is to know your income. If you’re unsure of how much money you’ll make, you should always guess low to make sure you don’t overspend.

So, how much money will you make in a month? How much money will you make in a full calendar year? How much money will you make every two weeks?

For our example, we’ll plan for a monthly budget. So, let’s say we expect to make $1000 from September through May (for $9000 total) and $2000 from June through August (for $6000 total).

This gives us a total expected income of $15,000 for 12 months or $1,250 per month.

School year income

However, depending on where we’re at in the calendar year we need to be careful. If we’re in September and setting up our budget we won’t expect to make that $2000 / month until the summer months.

This means that we should probably not include that extra money in our (September through May) budget. So, realistically we should budget for $9,000 for 9 months or $1,000 per month.

This also means that we’ll need to look at our income portion of our budget again at the end of May.

Calendar year income (beginning in June)

But, if we’re at the beginning of June we can include it for the year because we’ll have that extra money upfront. Because of this we can put it into the budget for the next 12 months.

So, we’ll have $15,000 over 12 months to include in our budget.

Expected spending

We’ll also break down our spending by school year and full calendar year because of the different scenarios most college students find themselves in.

School year spending

Now that we know we have $1000 a month in income through the school year, we can begin to make our budget.

What are some basic things we may need to budget for in college?

• Giving (church, charitable organizations, etc.)
• Food / household goods
• Cell phone
• Internet (if you don’t have it through your campus)
• Medical / dental / vision
• Apartment + utilities (or whatever your living situation calls for)
• Auto (if you have one)
• Entertainment / recreation
• Clothing
• Miscellaneous (think birthdays, Christmas, Valentine’s, etc.)
• Emergency savings

Now that we have a basic idea of what we might be spending on, let’s start plugging in some numbers.

• Giving – $100
• Food / household goods – $200 (if you’re living with your parents this might be $0)
• Cell phone – $30
• Internet (if you don’t have it through your campus) – $30
• Medical / dental / vision – $50
• Apartment + utilities (or whatever your living situation calls for) – $400
• Auto (if you have one) – $100
• Entertainment / Recreation – $25
• Clothing – $25
• Miscellaneous (think birthdays, Christmas, Valentine’s, etc.) – $20
• Emergency savings – $20

Of course, if you don’t have an apartment (or any other item listed) and you’re living arrangement doesn’t require spending, you can always move those funds around.

Now, remember, this budget is just from September through May. We’ll need to look at it again at the end of May to account for the extra income we expect to have from June through August.

Our summer budget ($2,000 per month) may look a bit more like this:

• Giving – $200+
• Food / household goods – $200 (if you’re living with your parents this might be $0)
• Cell phone – $30
• Internet (if you don’t have it through your campus or parents) – $30
• Medical / dental / vision – $50
• Apartment + utilities (or whatever your living situation calls for) – $400
• Auto (if you have one) – $150 (added $50 here to account for extra summer driving)
• Entertainment / Recreation – $50
• Clothing – $50
• Miscellaneous (think birthdays, Christmas, Valentine’s, etc.) – $40
• Emergency savings – $800

Pro tip: I would recommend taking any extra savings and intentionally build up your emergency savings fund. An emergency fund of $3,000 for a college student, depending on your situation, would be a really solid thing to strive for. You never know when your car might need to be replaced or when you’ll need to travel for a funeral. This little bit of cushion will help take the stress away before it begins.

Calendar year spending (beginning in June)

Remember, this scenario gives us $1,250 per month to budget for the entire year.

We’ll start with the same list we used from above and immediately begin plugging in our numbers:

• Giving – $125+
• Food / household goods – $200 (if you’re living with your parents this might be $0)
• Cell phone – $30
• Internet (if you don’t have it through your campus or parents) – $30
• Medical / dental / vision – $50
• Apartment + utilities (or whatever your living situation calls for) – $440
• Auto (if you have one) – $125
• Entertainment / Recreation – $30
• Clothing – $30
• Miscellaneous (think birthdays, Christmas, Valentine’s, etc.) – $40
• Emergency savings – $150

Habits

Setting and keeping good habits will get you a long way with keeping within your budget.

When I was in college I began using a spreadsheet to keep track of expenses in different categories. After a few years I switched to an app which kept track of all my expenses and allowed me to assign them to different categories.

There are a number of helpful websites and apps to use when building good financial habits. Here are just a few:

• The Simple Dollar
• Better Money Habits (college section)
• Mint.com
• Mvelopes

Keep encouraged

Even if you get sidetracked early or during your budget cycle don’t get discouraged.

Keep going!

You’ll be amazed at how quickly you can build up your emergency savings and save for those big purchases which inevitably strike.