money management

Money Management

Budgeting for Students

September 2019


Just about everyone can benefit from working with a budget. If your income is limited to part-time work or student loans while you’re in school, it’s even more essential. Knowing exactly what you need to cover your living expenses helps you determine how many hours you’ll need to work to get by, or how much to borrow. As a student, your financial situation is unique, and how you manage your money while in school can have major repercussions on your future financial health.

Taking Loans Into Consideration
Student loans, for many people, are what make or break their ability to go to college. There may be times when your workload and other responsibilities are such that you are simply unable to work a paying job while in school. Living off of your loans can carry you through those times. However, it’s important to remember that every dollar of those loans you spend will need to be repaid with interest, so the tighter you can make your budget during this time, the better off you’ll be in the long run. You may even find that you don’t have to borrow as much as what is available to you. Just because it’s there doesn’t mean you have to (or should) take it. In terms of budgeting, you can think of it like this: money you borrow now may show up as “income” on your current student budget, but it will be reflected as a repayment “expense” on your future budget, and a much higher one at that, once interest accrues.

Incorporating Line-items for the Student Lifestyle
A budget is only as good as the information you put into it. List all of your expenses. Some will be easy—fixed expenses like rent, car payments, or health insurance are the same each month and can be easily tracked. Others can be more difficult. Clothes, food, gifts, and entertainment vary so it’s hard to know what to plan for. As a student, your expenses may fluctuate more than the average consumer. What you spend one term may not be indicative of your projected expenses the following term, as you must account for costs related to class syllabi, lab fees, travels to and from home, school events, etc. Try to do the best with what you have. Take a look at your checking account activity and see what you’ve been spending in these or other areas. Going forward, keep track of what you spend, either through monitoring your accounts or by using an expense-tracking app. Once you know what you spend, you can review it and decide if those numbers work for you. Add up your total out-of-pocket education expenses, living expenses, and discretionary expenses. It’s better to have an estimate than nothing at all. From there, compare your income to your expenses and see how much, if any, needs supplementing through student loans. That’ll help let you know how much to borrow.

Carving out a Timeframe
Determining the timeframe for your budget is especially important if you’re depending largely on student loans for living expenses. Most adults operate on a monthly budget: they receive monthly paychecks and pay monthly bills. Most students, on the other hand, operate in the temporary bubble of their school calendars.

If you’re working, you can create a paycheck-to-paycheck, week-to-week, or monthly budget. If both work and student loans are part of the picture, it may be a hybrid of short-term and longer-term budgeting. Your academic schedule may be a better indicator of how to break up your budget: do you have predictable repeated expenses every semester? Or every quarter? Perhaps many of your expenses are paid only once at the beginning of a school term while others repeat monthly. The frequency of your loan disbursements is an additional factor that you should consider when creating a timeline for your budget.

While you’re first setting up your budget, you may need to invest a bit of time in that initial expense tracking. Once you’re moving along, however, you likely won’t need more than a few minutes a week to see if you’re on track and make adjustments if necessary.

Reducing Common Student Expenses
Think about your priorities. Obviously, tuition, books, housing, food, and transportation are all important. Make sure the decisions you make about these expenses are smart ones.

  • Are you maxing out all of your opportunities for grants, scholarships, and work-study before you borrow?
  • Shop around for your books. You may find cheaper options online than in your campus bookstore.
  • Is there a campus meal plan you can affordably buy in to even if you live off campus?
  • Weigh the cost of on-campus housing versus renting off campus.
  • Do you need a car? If you’re living on campus or are in college in an urban area with easy access to public transportation, perhaps you can go car-free and save yourself some major money in insurance, parking, car payments, and maintenance.
  • While discretionary expenses can be the spice of life, be mindful of what you’re spending in these areas. These can be the easiest targets to cut, but also, the easiest to blow your budget on. Be honest with yourself and be sure to budget for some fun money.

A solid budget reduces stress and can keep you from overspending—and potentially over-borrowing. By taking a look at what you’re actually earning, borrowing, and spending, you can create a livable spending plan that can help limit what you’ll be repaying in the years to come.