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Budgeting for College Expenses: Make the Grade at School and in Life

Updated on March 6, 2015

Heading to College? Here's Your Budgeting Homework!

Are you a recent graduate heading to college this term? Perhaps you are someone who is finally realizing their dream of higher education. Maybe you're a parent or grandparent that has been saving money for years to send their child to the school of their choice.

Before you pack your bags and pick out your courses, you have some homework!

Whether or not you have a college fund to help pay for expenses, you need to prepare a budget for each semester, as well as an overall financial plan to get you through the years to your diploma. Planning ahead will not only help you save money, but - trust me here - can help you get better grades and even potentially secure a more lucrative job when you graduate.

For many young adults heading off to school, budgeting for college is the first major step in adulthood. Sure, you might have owned credit cards and earned money at a part-time job, but being responsible for your daily expenses and managing cash flow to get through a long period of time is something that "grown-ups" have to do.

Learning how to budget is a lifelong skill that many do not master, but you can start off on the right foot at college. Let's review some budget tips for college students!

Save up for college costs!
Save up for college costs! | Source

Make a List of Your Potential College Expenses

When budgeting for college expenses, it helps to start by preparing a list of items for which you will have to pay each term. Here are some general suggestions:

  • Tuition - consider what it currently costs, and any projected increases over the next 2-5 years
  • Room and board - what will it cost you to live in the dorms or an apartment (including utilities) and eat? Compare various meal plans
  • Cell phone plans/wifi - don't forget monthly costs associated with staying connected
  • Transportation - include vehicle maintenance, gas, bus fare, bicycle locks and other gear
  • Books and supplies - among many items you'll need include paper, pens, notebooks, backpacks, and a notebook computer. Depending on your major, you may also need to pay lab fees
  • Insurance - health insurance, renter's insurance, car insurance
  • Personal expenses - clothing and shoes, grooming supplies, etc.
  • Entertainment - probably the smallest item on your list of college expenses, but keep a little bit set aside, if you can, for pizza, movies and new mP3 files

Don't worry yet if your projected expenses seem high for each term. We're going to review how you can reduce them, including an analysis of where you can cut costs, and where you should not compromise.

Attending College on a Budget

Use a spreadsheet when budgeting for college expenses
Use a spreadsheet when budgeting for college expenses | Source

Realistically Assess Your Income Sources

Budgeting for college expenses requires not only an estimate of cash flow out, but income in. Before you start deciding where to cut expenses and how many cases of Top Ramen you'll need before the winter holiday, take a realistic look at your income sources.

Typically, sources of income for college expenses include:

  • College funds - did a family member invest in a 529 plan for you? What are the terms associated with withdrawals?
  • Student loans - plan ahead and submit applications well in advance of the first term so you can know whether and how much cash will be available
  • Personal savings - perhaps you established a savings account with money from jobs over the years, or maybe a loved one has gifted money for you to use. Caution: only budget including money that has actually been transferred to you. Do not include the inheritance from Grandma if she is still sending you birthday cards!
  • Work-Study programs - some institutions allow reduced tuition or other costs if you work a certain number of hours during the term
  • Other employment - consider the potential of a part-time job, but also realize hours worked may impact your grades. Will you have to cut back later?

You will want to revisit these figures each term, and make adjustments as you go.  If you are fortunate enough to have a lump sum from which to draw, put aside only the amount you'll need for the semester or school year and invest the remainder.

Budgeting for college expenses
Budgeting for college expenses | Source

Why is it Important to Manage Your Money at College?

Managing your money at college will set you up for better grades and a brighter future. There are a number of reasons, this is the case:

  • Unexpected expenses aside, you'll build discipline and enjoy predictable cash flow with a budget
  • Living within your means helps establish better impulse control, which is a skill you will need in the workplace, at home and raising children
  • Money is a cause of stress; if you have adequate funds to pay for expenses, your stress level decreases which frees up mental space to focus on your grades and other more enjoyable pursuits
  • Graduating with less debt will allow you more flexibility in choosing a career or job
  • Less debt will improve your credit score, resulting in better financing deals on automobiles, housing and even improving your chance at your dream job (prospective employers often conduct credit checks)
  • It is a great sense of pride to graduate having managed your money well! That sense of well-being will carry forward as you pursue your dreams

Budgeting for College Expenses: Cutting Costs

Planning a college budget is not a one-size-fits-all approach. This is where you need to know yourself and consider the things that are most important to you.

The stress of college can become overwhelming. Saving money and not running up debt are both important goals, but so is graduating on time (however you define that) and in a field in which you are interested - with decent grades!

Ask yourself: why am I making this investment in college? What will cause me the most stress while I am here? When you minimize stress, you can better focus on your academic goals. In short, define the basic items you need for comfort and then you will start to get clarity on where you can cut expenses and where you should not compromise.

For example: Getting rid of your cell phone might seem like a great way to save $60-100 each month. But, if talking with your best friend back East will help you get through an all-nighter, or quell feelings of homesickness, then keeping your phone may be the wiser choice. Perhaps your dorm roommate has a great apartment you could rent at half the market cost? Think about the commute time, the neighborhood in which its located and potential discomfort that could distract you from your studies (pests, HVAC issues, crime, etc.)

Ideas for cutting costs: Could you sell your car and take the bus or ride a bicycle? Consider not only the savings in gas, but also parking, maintenance and insurance. Think about purchasing used books instead of new textbooks for the term. Maybe you could swap or barter with other students - you'll give him haircuts, if he gives you a ride to class each week. Plan your entertainment for the week, including an allotted amount. If you spend $25 on coffee all week, you don't have cash to go out on Friday night. There are many ways to cut college expenses without impacting your studies.

When you are true to yourself, it can help reduce the urge to spend foolishly on too many parties and vacations you cannot afford during Spring Break. Having not compromised on the things that are the most important to you, academic and financial success will build on itself, setting you up for a bright future.

Budgeting for College Expenses the Smart Way


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    • stephhicks68 profile imageAUTHOR

      Stephanie Hicks 

      8 years ago from Bend, Oregon

      Thank you Audrey - I'm glad you found the article pleasant! I hope my kids learn more about budgeting in the next 6 years before college... :)

    • akirchner profile image

      Audrey Kirchner 

      8 years ago from Washington

      Well done, Steph and so pleasant to read!

    • stephhicks68 profile imageAUTHOR

      Stephanie Hicks 

      8 years ago from Bend, Oregon

      Thanks! Yes, just changed my avatar to use a more recent photo ;)

    • profile image


      8 years ago

      I wish I had read this when I was going to college! This is a great resource!

      Did you change your avatar?

    • RicardoE profile image

      Ricardo Enrique 

      8 years ago from Guatemala City

      I personally do freelance programing at some recognized enterpices over the internet, that helps a lot, and does not take all of my time :)

    • stephhicks68 profile imageAUTHOR

      Stephanie Hicks 

      8 years ago from Bend, Oregon

      Thanks greentrea and emdi - yes, travel is a great thing to budget for in college! Glad you enjoyed the hub. Cheers, Steph

    • emdi profile image


      8 years ago

      This is a great hub. thanks Steph. I wish you wrote this hub when I was in college, I could have saved more for my travel :-)

    • profile image


      8 years ago

      Good post and very informative.

    • stephhicks68 profile imageAUTHOR

      Stephanie Hicks 

      8 years ago from Bend, Oregon

      Thanks Simone - somehow I think you probably managed your finances in college just fine! Muddling through or not. It sure does feel better to be in control of the money, knowing where it is coming from and where its going. I do hope that it helps college students and their families plan. - Steph

    • Simone Smith profile image

      Simone Haruko Smith 

      8 years ago from San Francisco

      I think I did a pretty good job budgeting in college, but I kind of muddled along since I never really had any direction on how to make a budget or plan expenditures until I started taking accounting classes. This is a fantastic overview, and I bet it'll make a big difference for a lot of college students!

    • stephhicks68 profile imageAUTHOR

      Stephanie Hicks 

      8 years ago from Bend, Oregon

      Thanks so much Pamela - I am happy to hear that this information could be useful for students heading to college. Best, Steph

    • Pamela99 profile image

      Pamela Oglesby 

      8 years ago from Sunny Florida

      Excellent hub for college students. You were very thorough.

    • stephhicks68 profile imageAUTHOR

      Stephanie Hicks 

      8 years ago from Bend, Oregon

      Thank you Amy - My oldest is 5 years away from college, so this is definitely on my mind. Plus, I guess in a lot of ways, it doesn't seem like that long ago I was there myself. :)

    • amy jane profile image

      amy jane 

      8 years ago from Connecticut

      Great information! You make it all seem so easy. :)

    • stephhicks68 profile imageAUTHOR

      Stephanie Hicks 

      8 years ago from Bend, Oregon

      Thanks Judy! I hope this guide helps students and their families plan realistic budgets for college :)

    • Judy HBerg profile image

      Judy HBerg 

      8 years ago

      What a comprehensive and well written hub!


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