Money tips: Budgeting and saving for college students

Written by: Credit Karma Staff
• Updated •3 min read
Group of college students laughing and working in the libraryImage: Group of college students laughing and working in the library

In a Nutshell

If you’re a college student, the right budget can help you plan how to pay tuition, organize your expenses and make adjustments on the fly. A budget can be a powerful tool so long as you hold yourself accountable and make realistic plans.
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College is a time to start creating your own rules and setting your own boundaries.

For many students, one of the big first steps in college is learning how to build a budget. Students typically have to account for expenses including textbooks, housing, activities with friends and emergencies. Creating a budget is a great way to determine where your money goes every month, and starting in college can help you establish good financial habits for the rest of your adult life.

Creating a budget is easier than you may think it is. There are multiple ways you can do it, from online calculators designed specifically for college students to spreadsheets that you create on your own.

Some tools work better than others depending on the person, but the most important thing is accountability. Whichever budgeting method you choose, be sure to keep a money management checklist and set realistic goals to keep yourself on track. It can also be helpful to discuss important details of building a college budget with your parents, guardians or anybody else involved in financing your education. Open lines of communication are important so that everybody is on the same page about what things will cost and where the money will go.

Don’t know where to start? Here are three money tips to help you start crafting a college budget.

1. Plan how you’ll pay for college

Part of budgeting for your college years is budgeting for college itself. The first major money-management challenge you’ll need to face is figuring out who is paying for college and where that money is coming from.

Well before the start of the school year, you and your family should talk about whether college will be paid for out-of-pocket, with a 529 plan, and/or with help from financial aid or loans. Be sure to fill out the Free Application for Federal Student Aid (FAFSA) using information from your or your parents’ taxes to see what financial aid you may be eligible for.

Aside from financial aid, your budget discussions may also include which bank account(s) you’ll need and possible considerations for a student credit card.

Many parents opt to make their children authorized users on their credit cards, but the temptation of being able to pay with plastic may lead to some early financial pitfalls. You and your parents may want to agree on some ground rules, such as using the card only for emergencies and being careful to budget wisely with your credit card spending. This conversation can also be a great time to discuss what kinds of expenses you’ll be looking at each year, who will pay for what and how the costs will break down.

2. Organize your expenses

Once you’ve determined where the money is coming from, the next step is to make a list of your expenses and the average monthly cost for each one of those expenses.

It can be helpful to list out your needs and your wants and mark them as such. Rank them in order of importance so you know which expenses should be tackled first and which expenses can be put off, either because they aren’t as important or because they’re wants instead of needs.

If you’re struggling to rank or list your expenses as wants or needs, consider organizing your expenses into two categories: fixed or variable. Fixed expenses are bills you can’t avoid and need to pay on time, such as textbooks, rent, groceries, transportation, insurance and debt. Variable expenses are more flexible and may include wants such as a gym membership or a night out with friends.

3. Be willing to make adjustments

Your income may not always stay the same, and sometimes there are unexpected expenses that you can’t avoid. You may experience car trouble, lose your job or find out that your school tuition comes with some unexpected fees.

Your budget should be adjustable so that you can better accommodate the unexpected. Just keep your priorities in mind so that no matter what, your most important payments are the ones you pay first. Developing good money-management and financial-literacy habits early can help you achieve long-term goals, and holding yourself accountable means you’re setting yourself up for more success (and less debt) later down the line.