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Successful Budgeting for College Students: Graduate Debt Free

Updated on January 7, 2012
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Keith Schroeder writes The Wealthy Accountant blog with 30 years experience in the tax field. He is the tax adviser of Mr. Money Mustache.

There is never enough. As an accountant starting his 28th tax season, I have come to the conclusion “there is never enough.” Clients with a six figure income struggling to pay bills confuses me. On the other end of the spectrum are clients with a $20,000 income maxing out their IRA contribution. Go figure.

College students face the challenges of financial responsibility for the first time in their life. The situation is even more difficult as students have a nest egg they need to nurse through an entire semester or academic year. The money is there for the spending at any time. Students who handle finances correctly can graduate with a degree debt-free.

Success is easy if you apply a few simple principles. Solid financial management habits will serve a student a lifetime and may prove more valuable than the education itself. The most important lessons happen outside the classroom; the greatest disasters, too.

Build a Plan

Would you close your eyes and let your car steer itself? Would you leave for vacation without first knowing where you are going? Likewise, you should not attend college without a plan on how to succeed.

Success is more than grades. If the money runs out before you complete your degree, you fail. If your debt burden is massive on graduation day, you will spend decades, maybe a lifetime, digging out.

At the end of this hub is a budget worksheet. I encourage you to print it out and use it. I will also provide a link to a worksheet that automatically calculates as you enter data. Make use of these tools.

The first step, even before entering the classroom, is to gather all your financial information together. Gather in one location your savings, expected wages and other income, family contributions, scholarships and fellowships, loans, and miscellaneous income. Then put together a list of all the expenses you anticipate. Expenses to consider are: tuition, fees, books, equipment, room and board, food, phone, transportation, insurance, and entertainment.

Write It Down

A plan/budget must be written down. Students have a lump sum of funds from scholarships, grants, and loans at the beginning of the school year and must allocate in a manner covering the entire year. Jon income will provide a steady stream of funds. Estimate funds available for the entire academic year.

Handle expenses in two columns: one for the monthly budget; one for the academic year. Some expenses will get spent early on, such as tuition and books. Items such as groceries and entertainment should have a firm monthly budget that is adhered to no matter what.

How much debt related to college do you have?

See results

Play With the Numbers

Once you insert all the information into your worksheet, play with the numbers. You can cut costs by buying textbooks used or through Amazon. Shop for affordable housing, if possible. Review transportation options for the most effective and economical. Personal needs, supplies, and medical are all considerations. Entertainment has the most opportunity for adjustment. College is work and entertainment is part of the unwinding process. However, always remain mindful of the financial drain caused by entertainment and shopping.

Little expenses add up. Smoking and drinking must get eliminated. Starbucks coffee everyday becomes a large budget item over the course of a month. A shopping trip here and a shopping trip there can destroy a budget. If your budget is tight, consider Goodwill for clothes and furniture. Stay away from credit cards. Debt kills a budget faster than anything else.

Apply to as many scholarships as possible. Unrestricted scholarships are available for any college expense, while restricted scholarships are applied to tuition and fees only. Scholarships add to the top of the budget, allowing more leeway on the lower half of the budget.


All plans need periodic review. A budget is not “one and done.” Once a month review your financial situation. Adjust for income changes and expense issues. Higher tuition or textbook costs will require an adjustment to other expenses or necessitate higher income from scholarships or a job.

Write your spending down every day. You want real-time knowledge on where you stand on expenses and income.

For an interactive budget click here.

Budget Income

Monthly Available
Academic Year
Family & Gifts
Restricted Scholarships
Unrestricted Scholarships
Other Income

Budget Expenses

Budget Expenses
Monthly Available
Academic Year
Tuition and Fees
Utilities and Phone
Home Furnishings
Personal Supplies
Other Expenses


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