A Crash Course in Budgeting for College Expenses
A Strong Budget Is An Incredibly Important Tool For New College Students...
While people of all ages find budgets to be irreplaceable parts of their daily lives, college students can benefit immensely from a smartly crafted budget. In college, students have a multitude of expenses to manage, from tuition and housing, to books and random activity fees.
Fortunately, building a budget is simple and straightforward, and it can even help students develop healthy financial habits that will follow them well after graduation. Start here to tackle your child’s college expenses and plan for their financial future wisely!
The Importance Of A College Budget
Sitting down with your child and planning out their college budget is one of the most important first steps of the college process. Even before your child settles on which colleges they should apply to, you should provide them with enough financial information for them to know what colleges will be in their tuition range.
A great place to start is the FAFSA; encourage your child to create an account and fill it out as soon as possible. The FAFSA requires information like household income, which will help colleges determine whether or not your child is eligible for certain modes of financial aid. Filling out the FAFSA and gathering all the necessary documents will put both you and your child in the right mindset for approaching their college budget.
You can also use this time to determine how much your child already has saved for college finances or predict how much they’ll need to save each month to pay their way through school.
After all this information is gathered, you and your child are ready to build their college budget!
How To Budget For Expenses Before College
As their first day of college approaches, students have a lot on their mind. From finishing their senior year strong to enjoying what’s left of their summer vacation, not only will their schedule be packed, but their college budget will become less and less effective the longer they wait.
The basics of a budget are similar all across the board, whether you’re saving for college expenses or retirement. The strongest budgets are divided into categories, and based on your reasons for developing a budget, these categories will look different. For a college budget, you should create categories for tuition, extra fees, books, housing, and everything else that your payments will be going toward.
You’ll need to determine what your or your child’s income and expenses will be each semester to determine the exact cap amount for each category of the budget, and the first category you should tackle is what will be the largest: tuition.
Tuition will be the largest part of your child’s college finances. It doesn’t matter if they will be attending a small liberal arts school or an Ivy League university; tuition is always expensive. Determine what their tuition costs will be every semester and write it down in a way that’s easy for you both to reference. Use labels like “Fall 2021” or “Spring 2022” to keep track of amounts and when certain payments will be due.
Since most financial aid only covers tuition, make sure you subtract the amount that your child’s scholarships, grants, or loans will cover.
The next largest amount of your child’s projected expenses will most likely be activity fees. Colleges collect activity fees every semester so they can run recreational programs, campus life organizations, and other community events for students. Add this amount to each semester’s tuition expense.
THE COST OF MOVING
If your child will be attending an in-state school or a university that’s relatively close to home, then this category can be optional. However, if they will be attending an out-of-state college, you’ll need to account for the initial cost of moving.
Consider elements like mode of transportation, and all the extraneous costs that coincide. For example, if they will be driving, you’ll need to account for gas, food, and possible overnight lodging. If they’re flying, you should consider the cost of their plane ticket, baggage fees, food, and public transportation to the college.
In addition to determining the initial cost of moving, include this amount in each semester’s budget so they have enough money saved up to travel home for holidays and summer breaks.
Whether you or your child will be paying for school, after you determine each category’s expenses, finalize the amount of income your child will need each semester to cover all costs. If they’re planning on working while attending school full time, your child can begin looking for jobs that will cover their semester’s expenses.
How To Budget For Expenses During College
The majority of the effort behind creating a budget will be before your child begins college. The best way they can budget for expenses during college is to stick to the plan that you outlined before they left for school, and if changes in amount occur, be flexible and adjust the budget accordingly.
After you tackle the larger college expenses, you and your child can take a look at the smaller categories of the college budget.
This amount will fluctuate based on how their college handles their housing program. If your child will be living off campus, instead of “housing” this category can be considered “rent.” Look at where your child has chosen to live on campus and add this amount to the semester expense list, after tuition and activity fees.
Meal plans vary, so be prepared for any amount to be added to your budget for this category. Again, this amount may be different if your child will be living off-campus. Instead of budgeting for a meal plan, they’ll be budgeting for groceries.
Everyone needs some “fun money.” If you don’t include this, budgeting feels oppressive, not freeing! Most students enjoy going to football games, out to eat, to the movies on weekends, and fun trips with their classmates - they’re going to need some extra change in their pockets for entertainment.
Ask your child to try to outline what kind of activities they would like to do during their first semester. If they’re going to college in an area with tons to do, do some research beforehand and estimate how much they’ll need to set aside every month so they can have some fun outside of class.
Although it seems like everything is transitioning online, students still need school supplies that they’ll use for many different classes. Your child will need to know what classes they’re taking each semester to estimate their school supplies budget.
For example, if they’ll be taking an upper level math class, they’ll most likely need to invest in an advanced calculator. On the smaller scale, you’ll never know when they’ll run out of printer paper or ink when they need to urgently print something out, or they’ve managed to misplace all their pens. Although most school supplies are pretty affordable, those small numbers add up over time, so budgeting for it is your best bet!
There are numerous ways for students to obtain textbooks for next to nothing. However, while they should always steer away from paying full price for textbooks, even the discounted price can be expensive. Have your child reference their upcoming class schedule to find all the textbooks they’ll need and their prices. After hunting down the best bargain, give a little wiggle room in the budget for sales tax and other fees that may come on top of the textbooks. Lastly, just like you did with the larger categories, include any financial aid they have that may cover the majority of these costs. Some colleges give each student a textbook stipend, and some scholarships even cover housing, so be aware of all your child’s eligible financial aid so you’re budgeting for the right amount.
Budgeting Like A Pro
Students must keep track of their budget every semester and constantly update it with new amounts. They will take new classes every semester which means more school supplies, new textbooks, more or less classes, and maybe even an adjusted tuition if there are any changes to their financial aid.
Of course, budgeting can be overwhelming if you bite off more than you can chew, so for now, focus on setting your child’s budget for just one semester. Once they get used to it, adjusting the amounts on their budget from semester to semester will feel like second nature.
Overall, it’s important that you and your child understand that money is fluid, and in college, their budget will be ever-changing. The key for students is living below their means, staying under their semester budget once it has been set, and maintaining healthy spending habits overall.
As always, WeAdmit’s professional counselors know the ins and outs of transitioning to college, including budgeting. If you or your child ever have questions or concerns, either about college budgets or college life in general, feel free to reach out! We’d love to provide you with the answers you’re looking for.
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