How to Budget as a College Student
1. Calculate your income
The first step to budgeting as a college student is to figure out how you’re going to pay for everything. In other words, you need to write out potential sources of income and determine how much cash each source will contribute to your overall budget.
Student loans and grants are two of the most common income sources for first-time undergraduate students. Nearly 90% of full-time students relied on some kind of financial aid between 2020 and 2021 according to the National Center for Education Statistics. And nearly a third of undergraduates accept federal student loans each year according to the Education Data Initiative, or EDI.
Yet it’s also important to point out that it could be risky to live off student loans alone. Even if you can cover your tuition and living expenses with financial aid, you might want to consider getting a job to give yourself wiggle room.
“There’s a common misconception that students shouldn’t be bothered with working and earning money while in college,” says Sun. “Yet often, when you learn to better manage your time and money, you’ll find that work can equal early opportunities to build your network and earn valuable work and life experience.”
Most students rely on various income sources to pay for college. During the 2022-2023 school year, the typical college student covered school expenses using the following funding strategies according to a Sallie Mae study:
- Parent contributions (income and savings): 40% of costs
- Grants and scholarships: 29%
- Student financing (student loans, credit cards, etc.): 11%
- Student contributions (income and savings): 10%
- Parent financing (Parent Plus loans, private loans, etc.): 8%
- Contributions from relatives and friends: 2%
Scholarships are the second most common sources of student income, but many families overlook the possibility of these resources. Sixty percent of students used scholarships in 2021-2022 with the money covering an average of $6,300 in expenses. Yet among students who didn’t receive scholarships, two-thirds didn’t apply for them.
2. Anticipate expenses
Next, think about common expenses you might face each month as a college student. This exercise can make it easier to divide up your available cash.
Student expenses can vary based on whether you’re living on or off campus, if you have a car to maintain and more. The cost of living can also depend on the part of the country where you attend school.
Below are the average annual costs of common college expenses for the 2022-2023 school year, according to the Education Data Initiative.
- Tuition: $9,700 for a four-year, public institution (in-state tuition) to $38,786 for a private, four-year institution
- Textbooks and supplies: $900 to $1,400
- Room and board: $9,000 to $13,000
In addition to these standard expenses above, the EDI also states that the average student attending a four-year college pays between $3,00 and $5,000 a year in additional living expenses. So, you’ll want to leave space in your budget for costs such as food, transportation, insurance (health, auto, etc.), streaming subscriptions, your mobile phone bill and more.
When it comes to everyday spending, such as entertainment and eating out, those expenses can be harder to track. But you can set a limit for how much you can afford to spend in those categories and aim to avoid going over that amount.
Remember that your budget shouldn’t just be about doing without things. Instead, it’s there to set you up for success and to make sure you have enough money for what matters most to you.
“A budget is not restrictive,” says Sharita M. Humphrey, a business and financial coach in Houston, Texas. “It’s a road map that will change over time and help you to better manage your money.”
3. Create a savings plan
Not only is it important to include expenses in your budget, you also need to save money. Having savings, even a small amount, can help you avoid debt and improve your financial security both as a college student and later in life.
It’s wise to add the money you plan to save into your budget, just as you would any other recurring expense. You may want to consider automating your savings goals too—a feature that many banks offer in their mobile apps or online accounts to make saving easier.
“The best way to save toward a future goal, like a spring break trip or upgrading a laptop, is to save without thinking about it,” says Matt Gromada, head of family banking at Chase Bank. “Just set it and forget it.”
When it comes to saving, a solid emergency fund is also essential. The classic guideline is saving enough to cover three to six months of expenses. Yet that amount could be a tall order for many college students. If your tuition, room and board are already covered, it may be fine to think outside of the box where your emergency fund is concerned.
“Anything is better than nothing,” says Dan Rooker, a Chicago, Ill.-based consultant for Student Loan Planner. “Start with something and work up to a cash cushion that equals the number of months in expenses that it would take you to find a new job if you lost your job.”
Storing your cash in a high-yield savings account can also help your money grow faster. Plus when you keep your emergency savings separate from your regular checking account it could reduce the temptation to spend that money on something else.
If you think college is too soon to start thinking about future retirement plans, you might want to consider adjusting your mindset. There can be tremendous benefits to saving money earlier in life if you can afford to do so.
“If you talk to anyone over the age of 30, the one thing that you will consistently hear them say is that they wish they started investing for retirement earlier,” says Chris Browning, host of the Popcorn Finance podcast in Los Angeles. “That’s because your best tool when it comes to reaching your retirement goal is time.”
Imagine you want $1 million in your retirement account when you turn 65. If you wait until your senior year of college (commonly 22 years old) to start investing, you’d need to invest around $220 a month (assuming an 8% annual return), according to Investor.gov’s retirement calculator. But if you start investing as a college freshman at age 18, you only need to invest $160 a month to reach that same $1 million goal. You’re eligible to contribute to an individual retirement account, or IRA, as long as you have earned income.
4. Make adjustments
Once you write out your income, expenses, and savings goals, you might find that you need to make some adjustments where your college budget is concerned. That’s a normal part of the process.
Over half of families (54%) say they took at least one action to reduce the overall cost of college according to Sallie Mae. Meanwhile, the most (76%) also worked to increase their income to help pay for college expenses.
“Budgets are fluid and will change and it takes time to master them,” says Humphrey. “Don’t get discouraged if you don’t get it right the first time. The great thing about a budget is that you’re in control and can make adjustments along the way.”
There are many ways to make college more affordable if you need to balance your budget. Some students apply for more scholarships or cut spending. Others participate in work-study programs, work part-time jobs or freelance for extra income. Still others take foundational courses at community college to reduce tuition costs before transferring to a university.
“College has gotten ridiculously expensive, even in the decade plus since I’ve graduated. So, it’s understandable that college students are having to make some difficult financial decisions,” says Browning. “If you’ve already cut your spending down as much as you can, working a few side gigs throughout the semester could help give you the breathing room you need.”
Once you have a financial plan you believe will work for you, you can use a budgeting app to simplify the money management process. (Buy Side particularly likes PocketGuard for first time budgeters and the basic version is free.) Setting up alerts on your checking account or student credit card (if you use one) may also help you avoid overspending, late payments and other financial mistakes.
“We typically don’t notice that we are overspending until we take a look at our bank account or credit card balance, which probably doesn’t happen often enough,” says Browning. “So one thing that you can do to stay on top of your money is to spend more time watching your spending.”
Above all, remember to give yourself grace when you create your first budget as a college student. No one is perfect at managing money the first time they try.
Frequently asked questions about budgeting for college
How much should a college student spend a month?
For the 2024-2025 academic year, a college student with a moderate budget should anticipate spending $26,400 to cover nine months of living expenses while attending school, or about $2,900 a month, according to the College Board. If your funds don’t stretch that far, the College Board projects low-budget students will still need $17,700 for nine months, or about $2,000 a month.
The amount you’ll end up spending could vary widely from those average projections, however, depending on your school’s location, your housing situation, and your extracurricular activities. You can find area-specific budget estimates on the College Board’s website.
How much do college students spend on groceries?
The amount you’ll shell out on food depends on whether you join a meal plan, how often you’ll dine out, and your dietary needs. According to the U.S. Department of Agriculture, the lowest amount a thrifty individual, between the ages of 20 and 50, cooking a “nutritious, practical, cost-effective diet prepared at home,” typically spends on groceries each month is $240 to $300.
If you opt for a college meal plan, it will likely cost you around $450 a month, according to the Education Data Initiative.
How much do college textbooks cost?
While the exact amount you’ll spend on course materials will vary depending on your major, access to used or e-textbooks and ability to rent rather than buy, the average four-year university student spent $1,230 a year on textbooks in 2020-2021, according to the National Center for Educational Data Statistics.
How much student aid will I get for college expenses?
The average undergraduate student received $15,500 in student aid for the 2022-2023 academic year. That sum includes help from grants, federal loans, federal education tax benefits, and federal work-study, according to the College Board.
——Additional reporting by Kerri Anne Renzulli.
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