By Alexandria White

Creating a budget in college can help you understand where your money goes each month, which is a good first step to take when you’re learning to manage your finances.

With more clarity on your spending and saving habits, you can work toward bigger goals, such as paying off student loan debt, traveling and saving money for future milestones like moving to a new city after college. While you may have fewer expenses during college, it’s still a good time to start tracking your money. The budget you create now can help you throughout your 20s and beyond. Plus once you get the budget set up, you only need to make small adjustments as your income and spending habits change.

There are many ways you can go about creating a budget, including using a budgeting app that connects to your bank accounts or making a spreadsheet with an online template. Whichever resource you choose, remember to stick to it and hold yourself accountable so you can achieve your money goals.

Here’s how to create a budget as a college student.

How to create a budget while in college

  1. Calculate your net income
  2. List monthly expenses
  3. Organize your expenses into fixed and variable categories
  4. Determine average monthly costs for each expense
  5. Make adjustments

1. Calculate your net income

While in college, you may be working a part-time job or internship to help pay for your education and afford everyday expenses. You might also have an income from grants, scholarships, loans or a monthly allowance from your parents. The amount of money you bring in each month is an essential part of your budget and creates the foundation for how much you can afford to spend.

As the first step in creating your budget, you’ll want to calculate your net income, which is the amount of money you earn less taxes. If you receive a regular paycheck through your employer, regardless of whether you’re part-time or full-time, the amount deposited into your checking account is your net income.

If you’re an hourly employee and your hours vary from week to week, month to month, try to figure out an average amount that you can generally count on each month. It’s better to go with a lower number, so you don’t risk overspending.

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If you make a freelance income, you’ll want to subtract taxes from your paycheck and save them in a separate account so you’re not surprised by a big tax bill at the end of the year. You can use the TaxAct calculator to estimate how much taxes you’ll be required to pay in a year, then divide by 12 to get a monthly tax estimate.

2. List monthly expenses

Next, you’ll want to list all of your monthly expenses. Here are some common college-related expenses:

  • School supplies (such as textbooks and electronics)
  • Rent or room and board
  • Groceries
  • Dining
  • Travel
  • Gym memberships
  • Household goods
  • Phone, internet and monthly streaming subscriptions
  • Transportation (such as gas, train tickets and bus fares)
  • Loan payments (such as student, auto and personal)
  • Insurance (such as health, rental and auto)
  • Utilities (such as electricity, water and gas)
  • Miscellaneous (such as gifts, entertainment and apparel)

And while deposits into a savings account aren’t an expense, it can be helpful to include savings so you remember to put money aside for future goals.

3. Organize your expenses into fixed and variable categories

After you listed your monthly expenses, it’s time to categorize which are fixed and which are variable.

  • Fixed expenses are bills you typically can’t avoid and need to pay, including text books, rent/room and board, groceries, transportation, insurance and debt repayment.
  • Variable expenses are more flexible and often include wants, like a gym membership, travel, dining out and entertainment purchases.

If your income were to decrease, you could always cancel your gym membership, postpone a vacation or reduce your takeout spending without much fallout. But you’re likely always going to have to pay for rent/room and board, transportation and insurance.

4. Determine average monthly cost for each expense

Once you label fixed and variable expenses, list how much you spend on each expense per month. Refer to your bank and credit card statements to get the amount.

Many fixed expenses you incur will typically be the same month-to-month, making it easy to put a dollar amount to the cost. For instance, your rent/room and board, meal plan, insurance and phone bills will likely cost the same each month. Some variable expenses may also have a set cost every month, such as your gym membership.

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However, some fixed and variable expenses don’t have preset costs. If you rent your own apartment off campus and incur utility expenses, such as electric and gas, the cost often fluctuates month-to-month. The same goes for groceries, takeout and household goods. 

For any categories where your spending varies from month-to-month, you’ll need to do some math to determine the average monthly cost. The calculation is pretty simple: Add up three months worth of spending for an expense and divide by three. You may want to round the total up to increments of five or ten. If your three-month average spending on groceries is $123, you may want to set the spending limit to $125 or $130.

5. Make adjustments

The last step in your budgeting process is to compare all the information you gathered and make sure the numbers work out. Look at your net income compared to your monthly expenses and see if you have enough money coming in each month to cover all your costs.

If you can’t afford your lifestyle, it’s time to make adjustments. While you can consider ways to make more money, like picking up more hours at work, you should also think about ways you can cut costs.

This may include reducing the amount of money you spend on variable expenses, such as limiting takeout orders and cutting streaming subscriptions that you don’t use regularly. You may also want to adjust some fixed expenses with fluctuating costs. When you go grocery shopping, clip digital coupons ahead of time and opt for store-brand items versus name-brand to save extra money. If you’re looking to move, find an apartment with cheaper rent.

You can also consider using a credit card that offers rewards on all your spending, which can help offset some of your expenses. The Deserve® EDU Mastercard for Students and the Petal® Visa® Credit Card both offer 1% cash back on eligible purchases. Plus, the Petal card provides up to 1.5% cash back after you make 12 on-time monthly payments. Both of these cards are good for students looking to sign up for their first credit card.

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And if you have money leftover after creating your budget, consider putting it toward any outstanding debt, like a lingering credit card balance, or use it to start saving it for the future. A high-yield savings account, like Marcus by Goldman Sachs High Yield Online Savings and Ally Online Savings Account, is a great asset for saving money since it earns more interest than traditional savings accounts.

Next steps

Now that you’ve put the hard work in and finished creating a budget, it’s important to stick to it. Following your budget while in college can help you pay off debt and graduate with strong financial habits that can help you achieve long-term life goals.

To stay on track, hold yourself accountable by setting up reminders to log expenses into your budget every day. If you decide to use a budgeting app, set alerts when you approach your spending limit for different expense categories. You can also set up transaction alerts with your bank or credit union that notify you if you approach a predetermined spending limit.

If there’s ever a change in your income or an expense, make sure you adjust your budget accordingly to avoid any mishaps.

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