Lauren HollidayI hate to be the bearer of bad news, but only about 35 percent of parents have saved or plan to save for college in any way.
And the parents who have saved only saved an average of $18,000, which is not enough to cover four years of school.
According to the College Board, in the 2017-2018 school year, the average private nonprofit college charged $46,950 for tuition, fees, and room and board.
For real.
But what does all this mean for you? It means that college student budgeting is more important than ever.
Ready to take stock of your specific needs and build your college budget plan? Let’s do this.
How to budget in college
Figure out how much you’ll need to save for college
If you’re older, and your parents haven’t had the luxury of saving for college, don’t worry. You don’t need to have all the money saved up-front. You just need to project the total cost of college and then figure out a plan to pay for your specific circumstance.
If you decide to work through your budget step by step (instead of using a savings calculator) here’s what you should consider when forecasting your projections.
What type of college are you attending?
As you can see in the chart above, tuition and costs will vary depending on what type of college you’re attending. The options are:
- Public two-year, in-district
- Public four-year, in-state
- Public, four-year, out-of-state
- Private, nonprofit four-year
- For-profit
While the above chart shows costs for tuition and fees and room-and-board, I’ll just focus on the tuition and fees, in case you’re living off of campus the first year.
For the 2018-2019 school year, the average tuition and fees for a four-year public university was $10,230 for in-state students and $26,290 for out-of-state residents. Compare that to the tuition and fees of a four-year, private nonprofit school, which averaged $35,830.
You can save significant money by staying in-state and choosing a public university over the private, for-profit.
How much will your living expenses be?
Your next biggest expense will be your living expenses, such as your rent and food.
According to College Board, if you stay on campus, you’ll pay somewhere between $8,660 and $12,680 on average for room-and-board, for the entire year.
If you aren’t staying on-campus, for whatever reason, then you should research the cost of living in the town where your school is located. A simple Google search should help you figure this out.
In addition to room-and-board, you’ll need to project how much money you’ll need for food each week/month.
Will you cook at home? Will you get a campus meal plan? Will you eat out all the time?
I highly recommend one of the first two options, even if you can afford the latter, because you don’t want to gain the freshman 15 anyway.
As it turns out, the government actually creates a monthly report, recommending how much food should cost individuals and families—a super helpful tool for college student budgeting.
There are a few different plans: Thrifty, low-cost, moderate and liberal, depending on how much you make or can afford.
According to this chart, let’s assume that most students are on the “low-cost” plan, with the average American college student spending anywhere between $39 and $58 per week on food.
Another study estimates that the average adult spends between $2,582 per year (for the lowest 20% of earners) and $3,622 (for the next 20% of earners) on food annually, which comes out to about $49 to $70 per week. That means—if we assume students fall into these two lowest categories—that they spend, on average, somewhere between $585 and $1,050 on food each semester.
This estimate does not include going out, ordering in, or drinking. Here are some weekly projections if you do any of the above each week:
If you ate out once per week at $20, your total food spend would increase somewhere between $885 and $1,350. Or, if you ate out once and partied once (assume $24 for alcohol and $12 for late-night snacks), your semester cost could actually double—with your food expenses growing, to $1,425 to $1,890.
Ouch.
How much will textbooks and school supplies cost?
Don’t forget that you need textbooks and other school supplies, like notebooks, a computer and probably software, like Microsoft Office.
According to the College Board, the average cost of books and supplies for in-state students living on campus at public four-year institutions in 2016-2017 was $1,250 per year.
How much will transportation cost?
Will you take your car to school? If so, you’ll likely have to buy a parking permit, and obviously, you’ll have the cost of gas as well as your regular vehicle maintenance and monthly insurance costs.
If you don’t have a car, is there public transportation that will work for you? Or will you need to Uber everywhere? Is walking or biking a viable option for you? Don’t forget to include trips home as well. How often will you return home? Pencil that guesstimate in as well.
How much will you spend on clothes?
This may sound like a “nice-to-have,” but it’s actually a necessity I forgot about because you’ll need professional clothes, like a nice suit, for when it comes to time to attend job and internship fairs and interviews.
How much should you budget for fun?
How much you budget for fun, or your “discretionary” spending will mainly be determined by how much you have leftover after the (more necessary) expenses detailed above.
What does this include?
Discretionary spending includes: Netflix and other streaming services, going out, and basically anything you want but don’t really need.
The good news is that going out in college, at least when I was there, is usually extremely cheap—especially for the ladies. 😉 Just know where the best deals are each night.
College budget plan: The best tips for students
Forty-three percent of students don’t track their spending, and 58 percent said they don’t save any money each month. Based on these stats, it shouldn’t come as a surprise that seven out of 10 students are stressed about their finances.
I was one of those seven students when I was in college, and let me tell you, it wasn’t fun. If I had made a budget with my father, who was helping me pay for school, then I probably would’ve been much less stressed. Learn from my budgeting mistakes, and follow these budgeting tips that will teach you how to save money in college.
Tip 1: Automate your finances
The most difficult part of saving is actually putting the money into our savings account each month.
So what if we could make doing this easier?
You could, and you will… by automating your finances.
Step 1: Have your bills sent to you on the first of the month
As a college student, you probably have a few [small] sources of regular income, which probably includes something like: money from student loans, money from parents and/or money from part-time jobs.
When do you get the bulk of your money for the month? If it’s on the first, then setup all of your bills to be sent to you on the first of the month.
Doing this will streamline the process, and it makes it super easy to pay your bills each month and be aware of what (and when) you’re paying each month.
Step 2: Put money toward your savings goal
You should be saving money in college because you never know when you’ll have a rainy day. You’ll also have student loans you’re going to have to pay back, and it could take up to a year to land a real job after college.
Remember: Pay yourself first.
Step 3: Automate your checking account
As soon as your funds arrive each month, the money will go to a few different places:
- Savings: Use “sub-saving accounts” for long-term goals like a down-payment on a house, travel, or student loan payments. Many banks give you the opportunity to create smaller sub-accounts in your normal savings account. This is perfect for goal setting.
- Credit cards: Automatically pay for recurring services, like Netflix and gym memberships, with your credit card. Then, set up your credit card to be automatically be paid off each month.
- Misc. bills: These are for bills that can’t be paid off with a credit card, such as rent, electric, water, and gas.
Tip 2: Negotiate your bills
Yes, as with everything in life, your bills are negotiable, and one little phone call could save you A LOT of money each month.
According to Ramit Sethi of “I Will Teach You to be Rich,” this is how you negotiate your everyday bills:
- Call them.
- Say: “I’m a great customer, and I’d hate to have to leave because of a simple money issue.”
- Ask: “What can you do for me to lower my rates?”
Easy peasy, lemon squeezy.
Tip 3: Negotiate your rent
Sethi also recommends negotiating your rent. Here’s how you can do it.
Step 1: Know what you want
As is the key with all negotiations, you must have a goal in mind.
For instance, your goal could be to save $200 per month or 10 percent each year on rent.
Knowing the specifics of what you want allows you to clearly and succinctly persuade your landlord to accept less.
Step 2: Sweeten the deal
Of course, you’ll have to give a little, to get a little.
What can you offer your landlord that will persuade her to accept less rent?
Here are a few things many landlords will happily lower rents for:
- Prepay months in advance
- Sign an extended lease
- Offer to extend the termination notice from 30 days to 60 or 90 days
- Offer to give up your parking space if you don’t have a car
- Promise not to smoke in the apartment, thereby saving the landlord money when you move out
- Promise not to keep pets even if they’re allowed
- Make a deal for referrals if they have low occupancy
Step 3: Prepare
Prepare. Practice with your friends and family before reaching out.
And if you need a little more of a push, here’s a few rent negotiation scripts by Sethi himself.
Tip 4: Don’t pay full price as a student
There are student discounts for EVERYTHING today. Whatever you’re buying, before you buy it, google “[what you’re buying] + student discount.”
Also, install the browser extension, Honey. It automatically applies the best coupon codes to anything you buy online.
Tip 5: Utilize campus resources
You could really eat for free every day on campus. There’s always an activity or club throwing an event with free pizza and soda. You just have to look for them.
Make an event calendar, and plan your schedule around these free food events.
Tip 6: Cook
According to Cheapism, a home-cooked meal can cost up to 60 percent less than going out to eat.
TLDR: Learn how to cook!
Tip 7: Plan for now AND later
Short-term planning is important, but it’s never too early to consider the bigger picture. Learn what to save for, how to set goals, and even consider investment opportunities:
Ready, set, budget!
Did I miss any college student budgeting tips? Share in the comments below!