Going Off to College: Setting Up a Budget

How to Set Up a Budget for Going Off to College

Many recent high school graduates are getting ready to go off to their first year of college. In addition to the academic and social transition students will face, they will also need to start managing their money. This will be a big difference for kids who primarily had their money managed for them by their parents during high school. Some students may have had a part-time job where they began to learn the value of a dollar and how much things cost as compared to how easy or difficult it is to earn that money. Either way, it’s important for college kids to set up a budget so they can manage living expenses, additional university fees, and student loans.

1. Personal Banker

Most college students don’t speak with a personal banker, but there’s no reason why they shouldn’t. Almost every bank will offer personal banking services, and some bankers specialize in student bank accounts. In some cases, full-time students will be able to avoid certain fees that other customers have to pay or may be able to get a minor line of credit even though they don’t currently have a credit history. Whether students speak to someone at the bank on campus or open an account with a nationwide bank or credit union, it’s a good idea for them to sit down and have a discussion about how to budget, where they can save money, and how to avoid having a large credit bill.

2. Living Expenses

It’s a significant change when students move out of their parent’s house and into a college dorm or student apartment. Most young adults won’t realize the extent of the different bills they have to pay. For instance, in addition to dorm or apartment fees, students will have to pay utilities, buy groceries, and pay for things like new clothes and shoes, and other non-academic expenses. It’s essential for students to inquire whether or not utilities and Wi-Fi access are available as part of their rent (as would be common in a dorm) or if they need to pay it separately (as would be common in an apartment). Students can sit down with their parents and make a list of each item and how much they think it will cost so they can set a basic budget (READ: 5 Things to do Before You Go Off to College).

3. Pocket Money

Most students want to have a fair amount of pocket money because having a little bit of extra cash can make the university experience a lot more fun. For instance, students will need money to go out for coffee or to the movies with a new friend, go on a vacation during a break, or just have a little extra to spend on the weekend. However, many students don’t know how much things cost and where they can get the best deal. Although many adults budget their extra cash by the month, it’s a good idea for college freshmen to set out their budget for the week until they see how much they spend and on what.

4. A Part Time Job Vs. a Savings Account

Another thing students should think about is whether they will be living off a savings account or working at a part-time job during the year. New college students find it extra challenging to work and study during the semester, but many students will rely on that cash to survive. Other students may be able to work full-time during the summer and winter break periods and put that money into a savings account to live on during the rest of the term. If students are working a part-time job, it’s essential that they calculate the amount of tax that will be taken out (probably 10%) before they make their budget.

5. Comparing Prices

One thing that can be helpful is for students to start learning how to compare prices. For example, buying coffee at a coffee house vs. making coffee in the dorm might be a difference of $50 at the end of the month. At student wages, it could easily take an entire day to make 50 bucks. Some price comparisons will be relatively small while others will be much larger, such as student loan interest payments that will commence upon graduation or living expenses. When students learn how to compare prices appropriately and make the most frugal choice they’ll be more likely to be able to start managing a budget on their own (READ: 10 Reasons You Need a Summer Tutor).

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