How to Set Realistic Budgets for College Students

College is a time for all kinds of learning — and that includes learning to set a budget. Whether your student is just starting out or has several semesters under their belt, whether they’re earning an income alongside their studies or receiving financial aid, it’s important to prioritize talking about how to budget in college. Here is our list of college-budgeting tips to share with your student and set them up for success, from thinking about expenses to being smart about cutting costs and a whole lot more.

1. Establish Open Communication

One of the most important things for college-aged young people to learn — and see modeled by their parents and other trusted adults — is that money is not a taboo topic. If they see you as someone who’s comfortable discussing financial matters, they’ll understand that managing their own money is something they can do, too. 

So, plan to have a money discussion early in the college application process, and make sure everyone knows what the plan is. Here are some questions to answer together: 

• Who’s paying for college, and how?
• What kind of financial aid will you need to apply for?
• Will student loans be necessary to pay for tuition and expenses? Who will be responsible for them? What’s the best way to manage them?
• How much spending money is needed for college besides tuition?
• What is a good budget for your college student?

2. Build a Budget and Track Expenses

Creating a budget habit is crucial. Explain to your young adult that starting to budget now helps them avoid the dangerous trap of overspending. If they’re completely honest about what they spend their money on each month, they’ll be less likely to make thoughtless, unnecessary purchases that’ll cost them later.

How much does a college student spend each month? The amount of money can vary depending on many factors, but a sample monthly budget might include these items:

• Housing/rent
• Utilities
• Internet
• Meal plan/groceries
• Laundry
• Transportation/gas
• Subscriptions to apps and periodicals
• Gym or yoga studio membership
• Car payment
• Parking
• Books and school supplies
• Medical expenses (prescriptions, glasses and so on)
• Dining out
• Clothing, accessories and makeup
• Entertainment
• Rideshares
• Travel during breaks

As you’re creating a list of expenses, be sure to also note how much money is coming in, and from where. Check out one of these budgeting apps, which can help make budgeting a breeze. Read about them together to find the perfect one for your family.

Follow our step-by-step guide to creating a personal budget.

3. Get Creative About Cutting Costs

One skill that many college students develop over time is saving money in innovative ways. If your family is paying for tuition, it’s always a good idea to stretch extra money as far as you can. Here are a few ideas to consider:

• Switching to a capsule wardrobe or selling gently used clothing
• Shopping at thrift stores (it’s better for the environment, too!)
• Buying pre-owned textbooks and making use of the library
• Cooking meals and making coffee at home
• Living with roommates
• Using public transportation when it’s available
• Cutting back on streaming subscriptions and non-essential technology

4. Prioritize an Emergency Fund

Many young people have no financial cushion in case of emergency, and not everyone has the safety net of a family with money who can help, either. Help your college student understand that having an emergency fund is as vital as tracking expenses and paying bills on time.

If your college student has no savings yet, help them set an initial goal of $1,000 (and enlist the help of an app, if necessary). Stashing away even $10 at a time is a step in the right direction. 

It’s also a good idea to review potential sources of income that can help build an emergency fund. These can include the following:

• Financial aid
• Athletic or academic scholarships
• Paid internships
• Campus jobs
• Summer jobs
• Part-time jobs (such as retail or restaurants)
• Babysitting
• Selling used textbooks
• Contributions from family

5. Consider the Future

Budgeting can feel restrictive, especially to someone just beginning to enjoy the freedoms of adulthood. Investing in a budget and a financial plan is like investing in an education; it’s putting in the work now to reap the benefits later. Help your student understand the power of their choices by putting things in real terms. In five to ten years, having savings and paying off student loan debt could mean a lot of things: more choices in the job market, a hard-earned vacation or being able to enjoy the lifestyle they dream of. It’s a trade-off for the things that matter most.

We Can Help

Your Farm Bureau agent can help you get off on the right foot with smart budgeting tools and savings advice to grow your family’s financial plan.