Creating a Budget When You Live Off Campus
Ready to tackle off-campus living for the first time? If that’s the case, off-campus living can be so exciting! After all, it means no resident advisors, no real rules, pizza (or ramen) every night and more! At the outset, you may think you’ve got off-campus living in the bag. However, what happens when you order a few too many pizzas during the semester? Or you notice your checking account’s pretty empty?
Even if you’ve just moved off campus, it’s a good idea to think about money matters ahead of time. It’s a great idea to create a budget right off the bat. (Get your roommates on board, too, so you’re not tempted by food at midnight after all-night study sessions or expensive spring break trips.)
Budgeting doesn’t have to be the totally boring exercise in frugality you may have read about or watched other people trudge through. Your family’s experience may have been to set aside money very carefully. Maybe your parents only allowed themselves to spend a certain amount of money on groceries or entertainment. (You might’ve thought it was booorrr-ing!)
Believe it or not, budgeting can be exciting, especially when you turn it into a little competition against yourself. (“I bet I can spend just $35 on groceries this week and beat last week’s expenses.”)
Below, we’ve outlined how you might want to think about budgeting, specific steps you can take and tools you can use to make it more exciting (yes, actually exciting!).
Whether you like to budget using an app or an old fashioned spreadsheet, the steps are pretty much the same. Here are the general budgeting steps you can take as a college student.
Step 1: Understand your expenses.
The first thing you need to do is do some simple addition. Add up all your expenses.
Expenses refer to ongoing expenses, or expenses that recur every month. Take a look at:
- Eating out (include coffee if it’s a regular expense)
- Ride sharing
- Household supplies
- School expenses, such as supplies, bus fare, etc.
Now, ongoing expenses don’t include one-time expenses, like that time you bought a smoothie at the coffee shop across town. Or that one time you bought your sister a birthday present. Put those in the “miscellaneous” column.
Step 2: Calculate your monthly income.
Next, figure out how much money you have coming in. It might not be super complex to total up because you might not have a lot of disposable income. Do you get a regular paycheck for your work-study job? From a part-time job at the grocery store? Do you get a refund check from the college from your financial aid?
If you are starting out, consider using the rule of thumb that you will get 70% of your hourly rate in each paycheck after taxes and deductions. Give yourself a cushion in case you work fewer hours than you initially expected. You may plan to take in extra contracting, consulting or side hustle money, but don’t add in that extra income into your calculation until you’re actually making the money.
Calculating your monthly income may be a little more complicated if it’s from your financial aid. If you are in this boat, you will need to spread one disbursement over more than one month. Carefully budget any financial aid amount across the semester to make it last.
Step 3: Subtract your expenses from your income.
Next, do a simple subtraction problem. Figure out how much goes out compared to how much comes in. Make some adjustments if necessary.
Sit down and divide your expenses into “needs” and “wants.” “Needs” should only include those necessary items, like rent, utilities, groceries and school supplies.
Anything else that isn’t an essential expense should be put into your “want” category. “Wants” include coffee runs, entertainment and nice clothes that aren’t required for a job.
Step 4: Make payments and savings happen — automatically.
One of the best ways to make sure everything falls right into place is to sign up for automatic bill pay. When you’re busy with classes, studying and extracurricular activities, it’s easy to slip up and forget when bills are due.
Unfortunately, a lot of extra charges accompany late bills — including overdraft fees, late charges and interest charges on your accounts. Check with your service providers (think utilities, internet and more) to find out whether these providers will allow you to automatically schedule minimum payments in advance. Most companies these days will let you avoid extra charges — all you have to do is ask or sign up.
Step 5: Pencil out expenses — but give yourself some “wiggle room.”
Nobody wants to be stuck in an apartment all the time, resenting the budget. Make sure you pencil out required expenses, but remember to have some fun, too. It’s okay to reserve money for a night out or an additional pizza.
You want to be able to reserve a few dollars for fun!
Pro tip: Steer clear of credit cards.
It’s risky to open credit cards as a college student because it’s easy to get trapped in a debt cycle and never get out of it. In fact, credit card loans reached $1.08 trillion in Q3 of 2019 and credit card debt makes up 26.2% of Americans’ total debt.
More than one-third of college students in the U.S. said they carry more than $1,000 in credit card debt, according to a survey by EVERFI and AIG. Students have continued to accrue more debt since 2012, according to the survey.
Student credit card interest rates often start around 20 percent and increase with late or missed payments. Spiraling debt can destroy your credit rating and make you ineligible to get an apartment, house or car down the road.
Adopt a credit card only if you know you can fully pay the bill each month. Carrying a balance can be a slippery slide, because you’ll pay interest on interest — and that could go on forever.
Another pro tip: Put together an emergency fund.
You may have heard your parents or grandparents say, “Put money aside for a rainy day.” It’s not old-fashioned advice — it’s an excellent recommendation!
How much should you put aside in a savings account or other low-risk account?
As much as you possibly can. If you can only afford to put $10 away per week, it’s okay. As long as you save it and only use it when it’s absolutely necessary, you’re money ahead. (By the way, wanting new electronics or a pricey new handbag isn’t an emergency.)
Use Technology to Help You Budget
Not interested in manually wrangling your budget on paper or on a spreadsheet? No problem. The right app can make budgeting effortless. Here are some great apps that’ll help you define your goals and help keep you on track.
Mint gives you a snapshot of all your accounts, bills and more so can see everything all at once — in one place. If you’re spending too much in one area, Mint will warn you! You can create budgets easily. More importantly, your information is secure. Mint offers secure encryption and multi-factor authentication.
Cost: It’s free!
YNAB doesn’t just track your spending and accounts, it teaches you how to manage your money and get ahead. YNAB shares access to real-time information from any device so you can share your finances with your partner. You can even try it free for 34 days!
Cost: Free for college students!
EveryDollar isn’t just geared toward Dave Ramsey fans. However, if you're a Ramsey fan, you may already like the EveryDollar budgeting app. Take just a few steps to get your financial goals off and running.
There’s really only three steps: Add your monthly income, total up your expenses and track your spending. You can sync to all your devices and make budgeting more sophisticated in less than 15 minutes.
Cost: EveryDollar is free but if you want actual financial tracking for your budget and want to connect your financial accounts, you need to get EveryDollar Plus. EveryDollar Plus costs $99 per year.
Get Your Budget in Gear
Good money habits will follow you the rest of your life. You may even become so sophisticated in all money matters that you can learn how to pay for college without the FAFSA — and do it next year! (Hey, you never know!)
In all seriousness, crafting a budget that works is really doable. Believe it or not, if done well, a budget can even give you a sense of freedom. There’s nothing worse than worrying about money or being in debt. They call it “financial freedom” for a reason.
Melissa Brock is the founder of College Money Tips and is also the Money editor at Benzinga. She spent 12 years working in college admission, then turned to freelancing and editing. Nothing invigorates her more than writing about college and money and helping families navigate the college search process.