How to budget as a college student

College is an exciting time: You’re surrounded by new people, new opportunities and a chance to dive into the next chapter of your academic life. But this transition also comes with different financial realities that require you to develop new skills around spending and saving money.

Along with navigating your new campus and sharpening your study skills, there’s another key lesson to learn: how to create a budget. When done right, a budget can help you limit debt, build some savings and accomplish your goals. Need to make sure you have enough for textbooks, rent, food—and some left over for a little fun? Want to spend a semester abroad? Creating a college student budget can help with these goals and more.

Whatever financial issue is giving you trouble, Katie Waters, CFP, founder of a financial planning firm, has tips to help you succeed. If you’re wondering how to budget as a college student, here are her top recommendations.

As you begin building your college student budget, you first need to figure out how much money you have coming in and how much you have going out. You can use anything from a simple spreadsheet to a budgeting app to track your income and expenses.

How should students pay for monthly expenses? Start by writing down all the sources of after-tax money you get each month, Waters says. That includes money from a part-time job, financial aid, stipends, grants, loans or a monthly allowance from your parents.

Next, figure out how much you’re spending each month. Waters recommends looking back at three months’ worth of your expenses. Refer to your debit card and credit card statements, plus any record of money sent through payment apps.

You should account for every dollar you spend, Waters says. One way to do this is by separating your expenses into common categories, such as:

• Cell phone

• Food

• Entertainment (movies, streaming services)

• Clothing

• Internet

• Transportation (airfare, bus tickets, car insurance, gas)

• Tuition

• Room and board or rent

• Textbooks and school supplies

The point is to add up everything, Waters says. “We want a line item for it all.”

Making and following a college student budget is the best way to ensure you have enough money to pay for the things you need while still having some money left over for the things you want. Here’s how:

Your budget should contain categories for all your major spending groups (refer to your list of expenses). Then decide how much you must spend for each and assign a dollar amount or percentage to that category.

Different budgeting styles work for different people. Waters notes that one method may be a better fit for your specific situation than another. You could try the 50-20-30 budgeting rule, which divides your money into three categories:

• 50% for needs: Essential expenses like food, textbooks and tuition

• 20% for savings: Money set aside for emergencies, future goals or other savings priorities

• 30% for wants: Nonessential spending, such as entertainment and clothing

You can also go with the envelope system, which involves setting aside a limited amount of money for each spending category. Once you’ve spent all the money in a category—whether you’re using physical cash envelopes or digital ones—you’ll need to wait until the next budget period before spending in that category again.

Once you’ve set a budget, keep track of it. If you’re consistently under or over, see if there are areas where you can save more or spend less. As you figure out how to budget as a college student, remember that your financial needs may change over time. As your needs change, so should your budget.

No matter which college budgeting method you choose, start by covering your essential expenses. That includes costs like tuition (if you’re paying for school yourself) and transportation to class or to your part-time job. 

To make that easier, Waters says you can find ways to reduce your expenses, such as:

• Renting, borrowing or buying used textbooks

• Buying snacks in bulk or cooking meals that are large enough that you’ll have leftovers

• Asking for student discounts when shopping in person or online

Focusing on what you have to pay for first can help to lessen the debt you add, Waters says. Bonus: If you can do that, you’ll also reduce the amount of interest you’ll have to pay while in school or after you graduate.

Certain expenses, such as your cell phone or car insurance bill, typically stay the same every month. Those are fixed expenses. Variable expenses can change from month to month, like food, gas or entertainment. These expenses can be tougher to budget for, but they can also provide more flexibility to your budget.

The envelope budget method can help you learn to budget more accurately for variable expenses when making a college student budget. For example, let’s say you spent $140 dining out in month one, $175 in month two and $120 in month three. Take the average of the three—$145—and set that as your “dining out” monthly line item that you shouldn’t exceed.

“The biggest ‘don’t’ for college students is saying yes to everything,” according to Waters. Instead, it’s important to set limits. “Get to know your town and find ways to hang out that are free or low cost.”

College might not seem like the easiest time to save money, especially when you’re working with a limited income. But even small amounts can add up, and building a savings habit now is a skill you can carry with you throughout your life.

Often, the easiest way to save is to make it automatic, Waters says. One way to automate is to open a savings account that accepts regular transfers from your checking account. Choose how much to save based on a percentage of your income, as with the 50-20-30 rule, or set aside part of your remaining balance at the end of each month. With Capital One Recurring Transfers or Autopilot, you can grow your savings automatically by scheduling recurring transfers that fit your specific budget and timeline.

It’s also important to try and build an emergency fund, even if it’s small, Waters says. An emergency fund is money you use for unexpected expenses, like fixing a flat tire, covering medical bills or repairing a broken laptop. A good goal for the amount to save in an emergency fund is three to six months of your expenses. That might sound like a lot, but you can build your savings slowly over time.

Waters notes that a savings account or emergency fund is also a great place to stash cash you weren’t expecting to receive, like birthday money from Grandma. Think of it this way: If you save $25 a week, in just six months, you’ll have saved $600. This is also a great chance to learn how to invest as a college student. 

By keeping your savings or emergency fund money in a high interest rate savings account, you can watch how your savings grows over time with interest. Start earning more with Capital One’s 360 Performance Savings account, which offers one of the best savings rates in America.

Once you’ve set a budget that you feel comfortable with, make sure to regularly check in with yourself about your spending. One trick that’s great for budgeting for college students is a financial checklist, which helps you look closely at your spending habits and whether your needs have changed. Changes to your income or expenses—such as earning more or less money, paying higher rent or facing a tuition increase—may mean it’s time to revisit your budget and make adjustments, Waters says.

The financial habits you build in college can make a difference long after graduation. Creating a budget and managing your money now can help you build a stronger foundation for your future.

If you’re looking for how to budget as a college student while staying on top of your finances, keep these tips in mind:

• Track your income and expenses so you know where your money is going each month. 

• Prioritize essential expenses, build savings when you can and review your budget regularly as your needs change. 

• Building good money habits now—like budgeting, saving and using credit responsibly—can help set you up for long-term financial success.

The right banking tools can make it easier to put these budgeting and savings habits into practice. Managing your 360 Checking and 360 Performance Savings accounts is simple with Capital One’s top-rated mobile app.