Top 10 Tips for Saving Money in College
Budgeting as a student is an essential component of making college affordable, but far too often students don’t have the tools needed to succeed. A 2016 study found that 43 percent of students don’t track their spending while 58 percent said they aren’t saving money each month. Based on these figures, it should come as no surprise that a separate study found 7 out of 10 students are stressed about their finances.
Managing money and setting budgetary goals may seem like the last things you want to do at the end of a busy day filled with classes, group projects and exams, but developing good habits early is worth the effort. The following guide will show why students need budgets, provide a list of common expenses, offer expert tips and include a list of helpful apps and websites designed to make the process seamless.
Why You Need a Budget
What with submitting assignments, completing required internship hours, playing on the intramural sports team and spending late nights with friends, setting aside time to create and maintain a budget may seem like a big ask. According to data collected by EverFi and Higher One, college students’ interest in following a budget, limiting spending and investing income into savings has steadily dropped in recent years. In fact, the number of those who follow budgets dropped by more than 10 percent between 2012 and 2014. While budgeting takes time — a valuable commodity in college — it’s worth it. Students who observe financial spending limits and savings goals early on not only worry less about money, but they also have nest eggs available when graduating and starting out in their adult lives.
The best piece of advice for figuring out the components of a budget is to keep it simple. While many adults use an annual budget system, students often find it easier to work from a semester model. Whether you receive money from a parent/guardian or have a job, consider how much money you typically receive during a semester. Divide that amount by the length of your semester to get a sense of how much money you can spend each month.
According to financial behaviorist Syble Solomon, many students run into budget issues when they begin making decisions based on emotions in the moment. “Students need to think through the ‘what if’ questions and be prepared for situations when they will spend money without thinking,” she says. “What if your friends are going to a concert where tickets cost $100 and you hadn’t planned on that expense? What if your friends are planning an amazing spring break that is way more than you planned to spend? By being aware that things like this will pop up from time to time, you can be better prepared and not throw your budget out of order.”
Some expenses are fixed, while others fluctuate from month to month. By setting a budget for things like eating out, clothes and travel, students avoid running out of money before the semester ends and can save for things like spring fall break or any emergency expenses.
The next step is to find a website or app to manage your budget. Many free tools exist that automatically import debit/credit card statements and categorize them into various types of expenses. By tracking this information, students gain a sense of where they need to cut back and places where they can save money.
College Expenses to Expect
Determining what your expenses will be is a valuable step for any budget, and students are likely to have several fixed and variable expenses each month. When creating a budget, it’s important to consider which (if any) expenses are covered by a parent or guardian and subtract those from your monthly expenses. Following are common expenses students may expect to be responsible for:
- Housing: Whether students live in dorms or in off-campus accommodations, this is likely to be one of their largest monthly expenses.
- Books: Usually purchased at the beginning of the semester, books can add up to a little or a lot depending on whether students purchase them used or new.
- Utilities: Electricity, gas, water, cable and internet bills typically are covered for students living in on-campus housing, but those with their own accommodations off campus should tack these onto their list of monthly expenses. All students should also include that monthly cell phone bill.
- Transportation: Students with vehicles must consider costs related to auto loan payments, insurance, maintenance and repairs, fuel and parking, while those who rely on public transportation need to think about monthly bus, light rail or subway passes. Anyone who may take advantage of ride-sharing services (cabs, Uber, Lyft, etc.) or who shares costs as part of a carpool also should consider those occasional expenses.
- Savings: The image of poor college students is a pervasive one, but it need not be true. Those who plan and budget wisely actually can save money while in school. Even if it doesn’t seem like much, it does add up.
Example of a College Student’s Budget
Expenses for college students vary significantly based on where they’re enrolled, how much their institutions cost, whether they receive money from parents or guardians and whether they have solid budgets in place to rein in their spending. Some monthly costs — such as housing, transportation, utilities and groceries — are unavoidable, while others — such as entertainment, travel or trips to the mall — are more about wants than needs. By finding a balance between needs and wants, students can enjoy a happy medium that allows them to spend time with friends and have fun without blowing their budgets.
To help college students better understand the expenses they are likely to incur while in school, the College Board provides an annual living expenses budget according to a national average as well as for specific regions of the country in which students may be enrolled. For the 2018-2019 academic year, students who plan to spend moderately will need $24,980 per year while those who plan to maintain low, restricted budgets should expect expenses to total $16,730. The following budget includes common student expenses divided into a 12-month payment schedule, based on combined figures from College Board and the U.S. Department of Education.