Student Budgeting Calculator
While budgeting might be the last thing on your mind as a college student, embracing this aspect of adulthood might be the smartest move you’ll ever make.
With a budget or spending plan in place, you have the potential to stay on track with your goals, pay down your student loans faster, and set yourself up for the best financial scenario possible upon graduation. Without a budget, on the other hand, you’re much more likely to overspend, rack up more debt as you earn your degree, and get off to a rocky start once you graduate and transition into the real world.
Creating a budget early in your college career can help you avoid the struggles many students face as they graduate and face their debts for the first time. While the word “budget” often conjures images of a restricted life void of any fun or excitement, that doesn’t have to be the case at all. In practice, a budget is nothing more than a plan created to track your spending and make the most of the dollars you earn.
By the time you learn to live on a budget successfully, you’ll know:
- Where every dollar you spend goes each month.
- Where your problem spending areas are.
- How you’ll handle any unexpected bills or emergencies that pop up.
- How much you can spend each month without going into debt.
Before we dive into exactly how student budgeting works, let’s talk about the different types of goals you should formulate as part of the process. If budgeting is simply a plan for your spending, then you should have certain outcomes in mind by the time you learn to master your monthly budget.
Ultimately, you’ll want to come up with some short-term, medium-term, and long-term goals you hope to achieve. While these goals will be different for everyone, the following examples could easily apply to your situation:
- Short-term goals: As you begin creating a budget or spending plan, the first goals you should shoot for might include figuring out how much you earn each month and how your current spending matches up to that amount, spending less than you earn each month, and deciding how much money you can save each month.
- Medium-term goals: Goals to aim for over the next 1-2 years can include learning to live on a budget without overspending or falling off track, building your emergency fund so you can handle unexpected expenses that arise, and saving money for planned purchases such as an upcoming trip with friends, a computer for school, or textbooks for next semester.
- Long-term goals: Goals you might be thinking about by the time you graduate include living within your means so you leave school with minimal credit card debt, making a solid plan to pay off your student loans, saving for a down payment on your first home, and even starting to invest for retirement.
While the idea of buying a home and saving for retirement can seem really far off, those milestones may come much more quickly than you think. College may be the most exciting time in your life, but the time you spend there is truly fleeting. Enjoy it while you can, but also remember that the future will be here before you know it.
Budgeting can help you prepare adequately for that future, but only if you get with the program. This resource was created to introduce you to the concept of budgeting and help you get started.
A Step-by-Step Guide to Creating a Student Budget
Creating a budget might seem daunting at first, but it’s easy once you get started. The most important step is just getting started in the first place. Trouble is, that’s often the most difficult step to accept.
Either way, the main goals you’ll want to achieve as you create your budget include:
- Identifying your monthly income.
- Figuring out how much you need to live each month.
- Comparing your income to your expenses and deciding whether you need to cut your spending.
- Trimming your expenses or earning more money.
- Allocating all extra money to savings and debt repayment.
- Tracking your spending and learning to live below your means.
Step 1: Identify your monthly income
Before you start building a budget that will work for the long term, it’s important to figure out exactly how much money you have to work with each month. Potential income sources include:
- income from a part-time job
- financial contributions from family members
- any financial aid you may receive (scholarships, grants, work-study, etc.)
Before you can create a monthly budget, you need to figure out exactly how much money is coming in. This is also an area that may need to be adjusted over time. If you find that your income is insufficient to meet your expenses, you may need to find a way to earn more.
Step 2: Figure out how much money you need each month.
Once you’ve figured out your monthly income, you’ll want to calculate the other side of the equation – your average monthly expenses. While some of these expenses might be fixed each month, others will fluctuate over time. Here are some examples of fixed and fluctuating expenses you’ll want to tally up:
Fixed expenses may include:
- Any monthly tuition and fees you are responsible for
- Car payments
- Utility bills, including cable TV, Internet, or a cell phone plan
Fluctuating expenses to budget for can include:
- Books and supplies
- Gas or transportation expenses
- Dining out and entertainment
While your fixed expenses shouldn’t change much on a monthly basis, you should have quite a bit of control over your variable expenses. As you transition through this process, you may even find that controlling your variable expenses is the key to your success.
Regardless, you’ll want to tally up all of your monthly expenses, both fixed and fluctuating, to come up with a monthly total for your required living expenses.
Step 3: Compare your income to your expenses.
As they say, this is where the rubber meets the road. Once you have a handle on your monthly income and your monthly expenses, it’s time to see how they stack up and create a budget that will actually work.
If you’re spending more than you’re bringing in, you’ll realize as much once you compare each of these important figures side-by-side. If you’re spending less than you earn, on the other hand, you should have a surplus to allocate to savings at the end of the month. Either way, comparing your income to your expenses should quickly show you where you’re at.
Step 4: Trim your expenses or earn more money if necessary.
If the numbers aren’t adding up in your favor and you’re taking in less than you spend, there are two strategies you can pursue. First, you can consider trimming your expenses so that you have money left over to save each month. Alternately, you could try to earn more money so that your income outpaces your monthly bills.
Since you’re a college student with limited time to spare, the first approach – cutting your expenses – is usually the best one. While your fixed expenses can be impossible to slash or negotiate down, you should be able to find some wiggle room among your variable expenses each month. Here are a few tips that could help you cut down on those pesky extras:
- Take a close look at your food spending. If you’re dining out or hitting the bars too often, this is one area you’ll want to dissect. Try cooking at home more often, and arrange get-togethers at friend’s dorm rooms and homes instead of costly restaurants and bars.
- Tackle problem areas. If you find you’re spending far too much on clothing or school supplies, look for new ways to save. That could include shopping at thrift stores, borrowing supplies from friends, or simple cutting back by 10% to 20%.
- Get a roommate. If your housing situation can accommodate another person, consider adding a roommate to cut down on your monthly living expenses. Not only can a roommate pay a share of the rent, but they can also help lower your utility bills and grocery spending, too.
If trimming your expenses isn’t enough – or if you find you simply want more money to play with each month — you can consider finding a part-time job that offers flexible hours that won’t conflict with your class schedule. If you already have a job, you might try to pick up more hours, cover shifts for others who can’t make it, or switch positions to earn more money. And if you can’t accomplish any of those tasks at your current job, you could even update your resume and begin searching for a new position that will help you earn more.
Also consider picking up occasional work such as babysitting, tutoring, dog watching, and errand-running. When it comes to boosting your earnings to make your budget work, you shouldn’t limit yourself.
Step 5: Allocate your extra dollars toward savings and debt repayment.
Once you’ve made any necessary adjustments to get your spending and income to match up, you’ll want to figure out how much money you could potentially save each month. This figure should be close to the difference between your income and expenses, and may fluctuate over time.
To make the most out of this sum, you’ll want to allocate it to savings each month as quickly as you can — to get it out of sight and out of mind before you’re tempted to spend it on junk you don’t need. At the beginning or end of each month, take special care to transfer this leftover money to your emergency savings account. Or, if you have outstanding consumer debts like a credit card balance, you can use the extra funds to pay them down.
At the end of the day, this monthly “surplus” is what will help you get ahead – and stay ahead – while you’re in school. Don’t squander it by splurging or using it on unplanned expenses. The best way to make your money work for you is to put these extra funds to work for you.
If you don’t have an emergency fund, now is the perfect time to start one. As they say, “life happens,” and you’ll need some extra funds to deal with life’s emergencies as they arise. If you’re able to save even $50 per month, you could have an emergency fund with $600 by the end of this year. It all adds up, but only if you get started right away.
Step 6: Track your spending and learn to live below your means.
Throughout this process, you should learn a great deal about yourself. You’ll discover how much you’re really earning, plus any spending weaknesses you have. But most importantly, you should learn exactly what you need to do to get ahead – and stay ahead.
Remember that budgeting isn’t an once-in-a-lifetime task. Even if you’re using a budget that runs monthly, you’ll need to sit down and create a new budget for each month as it begins. Meanwhile, you’ll need to keep up with your budget and monitor your spending to make sure you’re staying on track. A budget can only work if you let it, but that does require some labor and upkeep on your part.
Student Budget Calculator
To make this process easier, we created the student budget calculator below. After entering each of your monthly expenses and your income, you should be able to figure out:
- how your income compares to your expenses,
- areas where you may need to trim your budget, and
- how much money you need to break even each month.
While this tool isn’t a true budget in itself, it can help set you on the right track as you transition towards budgeting for the future and living below your means.
While the step-by-step guide and student budget calculator provided in this post can help you start off on the right track, there are plenty of pitfalls you’ll need to avoid along the way. While some are easy to spot and predict, others may appear to come out of nowhere.
These budgeting tips can help you succeed through each step of the process:
When you’re first getting started…
- Shoot high when estimating variable expenses. When you’re estimating variable expenses, aim high – especially at first. You don’t want an expense that ends up being larger than you planned to throw you off track. If you shoot high, on the other hand, you’re less likely to go over budget.
- Leave some wiggle room if you can. In addition to overestimating your variable expenses, you should leave some wiggle room if you can. It’s easy to forget about infrequent expenses when you’re first starting out, and carving out a category for miscellaneous expenses can help you prepare.
- Make sure to “pay yourself first.” Once you get to the point where you’re saving money, you’ll want to transfer that money into savings right away. By paying yourself first, you can make sure your extra funds aren’t spent elsewhere.
- Differentiate between needs and wants. As you look for ways to cut back, remember the difference between needs and wants. Just because you want something or have grown used to having it doesn’t mean you actually need it. By focusing mostly on your actual needs at first, you can spend a whole lot less.
- Remember that college is temporary. While living frugally on a budget may not be ideal, you have to remember that this situation is temporary. You’ll graduate one day and hopefully move on to a job with a great compensation package you can count on. By living the “student life” now, you can save enough to live a more luxurious life later.
If your budget isn’t working…
- Keep trying. Don’t let a bad month throw your budget off track completely. Budgeting is an ongoing process that can take several months to acclimate to. If the process doesn’t go smoothly at first, try to figure out what the problem is early on.
- Make adjustments as needed. If your budget is constantly falling apart, you might need to make some adjustments. Look for additional ways to cut your expenses or earn money, then make sure you’re not splurging or making unplanned expenses on a regular basis. Last but not least, create a category for miscellaneous spending so that one unplanned purchase doesn’t ruin your budget.
- Don’t give up. No matter what you do, don’t give up. Your future self depends on the financial habits you pick up while you’re still in school. With enough determination and some humility, you should be able to create a budget that will improve your life, help you avoid debt, and set you up for financial success after you graduate.