Budgeting Your Money in College

Budgeting and tracking your money in college helps you stay on top of your finances so you can avoid unnecessary borrowing. For example, budgeting helps you know basics like:

• How much money you have.
• Where it comes from and when.
• Where you need to spend it.
• How much you need to spend and when.

And fortunately, it’s not complicated to keep track of your money.

A simple budget can help you track necessary expenses (housing, food, transportation, tuition) and the not-so-necessary ones (ordering pizza, going out with friends, vacationing).

Managing your cash flow (when money comes in and when your bills are due) can help you decide when you can spend money and what you can spend it on.

Together, budgeting your money and managing your cash flow help you prioritize your spending and ensure you don’t spend more money than you have.

Ultimately, making smart budgets can help you borrow less for school, understand how much you spend, and track where you spend the most.

Budgets come in many shapes and sizes.

It’s often best to start with a basic one and then add over time. You can separate your budget into days, weeks, or even pay periods (if you’re a working student).

Track all your income sources

To figure out how much money you can dish out, you have to know how much is coming in.

Track all the money you receive each week, month, or whatever period of time works best for you. This includes money from your job, financial aid, and/or parents.

Consider using a money management app to help track your income and expenses.

Figure out what your expenses are and when you need to pay them

This includes regular, periodic, or one-time essentials.

Some expenses to start your budget with include:

• Housing and rent.
• Groceries.
• Transportation costs, like gas and insurance for your car if you have one, or public transit costs.
• Textbooks, tuition, and fees.
• Credit card or loan payments.
• All the non-essential spending on things like entertainment, restaurants, drinks, and similar stuff.

Compare your income to your expenses

Comparing income to expenses can provide some visibility into where you’re spending your money and if you’re spending more than your income.

For example, take a look at this graph. The green line represents income, and the red represents spending, or expenses.

If your expenses are higher than your income, try to reduce what you spend on non-essentials. That’s usually a good place to start.

And if possible, it’s good to have some money at the end of each month for to put toward saving for unexpected expenses. Even a little bit each month goes a long way!

If you’ve tried all these things and still have more money going out than coming in, talk to your financial aid office about your specific situation to see about additional school aid that may be available. 

Cash flow management is all about timing income and expenses so they overlap in your favor. It helps keep your finances in good working order.

You want to make sure you have enough money in your bank account to pay bills, especially if you have them set to pay out of your bank account automatically.

For regular income and expenses, cash flow planning is straightforward and can be set up on a schedule. Managing non-regular income and expenses requires more thought.

For example, if you are counting a financial aid refund as income, and it covers part of your living expenses, you may need to set aside enough money to last until your next financial aid check arrives. In this situation, it’s all the more important to have a handle on your budget so you know how much to set aside.

Here are some key tips for great cash flow management:

Establish a base amount for your bank account

Only go below this amount in emergencies. This helps prevent overdraft or other bank fees.

Use your budget to identify when you get paid and when bills are due each month

With money coming and going all the time, this can help you understand what your daily balance will be in your bank account.

Include income and expenses that don’t happen monthly

This helps you prepare for non-regular expenses, and it helps you remember how and why some months were more prosperous than others.

Buy and pay for things on a schedule or at different periods each month

It can require some discipline to wait and make your impulse buys later (or not at all), but you have to take care of your essential expenses first.

Should you work and go to school?

As a student, you’ve got classes to attend, tests to study for, and textbooks to read. That takes up a lot of your time and mental energy.

Plus, you’ve also got a load of personal responsibilities to keep track of. At face value, it may seem like you shouldn’t work and go to school.

Here are some of the pros and cons of working as a student:

Pros

• You can prevent unnecessary student loan borrowing by earning money in college to help pay for school.
• You can make some extra money for yourself and/or those that depend on you.
• If you find a job, work-study, or internship in the field you’re interested in, you can gain valuable experience for that first job out of college.

Cons

• Time spent working takes away from time you could spend on finishing school. You could take extra classes or study more in those hours you’ll spend at work.
• Going to school part-time so you can work more could delay your graduation and entrance into your chosen career path.
• If working causes you to do poorly in a required class, you’ll have to pay to retake that class, possibly leading to more borrowing.

You can also check out our handy Work vs. Borrow Calculator to help you figure out whether working more is better than borrowing more student loans in the long run.

If you’re set on being a working student, there are ways to do it successfully to balance out your responsibilities and not experience burnout, which can lead to retaking classes, delayed graduation, or leaving school altogether.

You’ll have to make sure you can juggle both school and work. You don’t want to spread yourself too thin (and that means doing better than the bare minimum).

If you do work while in college, try to keep your work schedule manageable for work/school/life balance.

Also, make sure you invest some time each week applying for scholarships and grants.

Ask your financial aid office about work-study

Work-study opportunities can be a good way of earning money toward tuition costs. Your financial aid office can help you find these jobs.

Many times, the hours at a work-study job will likely be better for you and more flexible than if you found a job outside of school.

Whether or not you choose to work through college, stay focused on the goal of getting your education for as little money out of your pocket as possible!