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Why and How To Budget as a College Student

This post is from a student, parent, or professional contributor. The opinions expressed by the author are their own and do not necessarily reflect the positions, viewpoints, or policies of Niche.

A man's hands hold open an empty brown wallet.

When you think of the word “budgeting,” what is the first thing that pops into your head? Money hardships? Excessive saving?

Mastering budgeting is a skill every college student needs. If you are on your own for college expenses, whether it be through scholarships, financial aid, or working to afford your education, budgeting skills are crucial.

Even if you are receiving help from family or friends (like me), you should also budget and use the extra help to your advantage by learning good budgeting skills. That way, you can work towards being on your own in the future.

First step to independence

The first reason to budget is because you are entering the real world, and being independent is a lot pricier than you think.

For most incoming freshmen, college is the start to being on your own. Many students will no longer live at home where parents take care of most, if not all, of your living expenses.

All of a sudden, you’ll have to think about paying for groceries, gas, and other expenses. Many students take out loans for their tuition.

This great responsibility can be overwhelming. Don’t get caught without a plan or you may find yourself in a financial hole you unwillingly dug yourself!

Limited funds to spend

The second reason to budget is because your funds are now limited and restricted. If you will be a full time student, you will not have the time for a full-time job, meaning the money you make may barely be enough to cover your full-time expenses.

However, even students who work part-time will find cash not coming in as quickly as it goes out to pay your expenses. It is all too common to find college freshmen who have zeroed out their checking account before the end of the first semester (personally guilty).

Increased responsibilities

With financial demands increasing by the day, the third reason to budget is because financial demands increase, and it is your responsibility to keep up with the tide.

Not only is your income coming in at a slow or non-existent rate, but the financial demands of living independently are always increasing.

For me, I’ve been trying to keep up with gas prices constantly increasing, and my electric bill is particularly high in the summer due to my air conditioning units.

Even students who have their financial aid in order will find themselves spending money. Takeout after late nights of studying, mall trips with your new college friends, and activities such as cool campus restaurants and movies quickly add up.

Grocery runs and the need for toiletries take a toll, not to mention the added expense of school supplies (textbooks, calculators, etc.) needed.

Add in a few fun weekend getaways to neighboring landmark cities, and the $500 you had saved up for an entire year can be blown though in as quick as the first month you’re in college!

Distraction from your studies

College is a crucial part of your development, and if you are like me, you put significant importance on your GPA. Distractions are detrimental, which is reason number four why you should budget.

Being short on cash distracts me from my studies. I always seem to worry more and study less at the end of the month right before tuition payments are due.

With all the demands of college, budgeting may be last on the list of importance. However, as the old saying goes, those who fail to plan, plan to fail.

Studying for a good GPA, creating new relationships, and having a social life can be difficult to prioritize since these things are so important in forming your college experience.

However, be wary of deciding not to plan and simply going with the flow. To you, many choices seem more important than spending the time and energy to budget because the immediate satisfaction is greater.

All the activities college offers can serve as distractions to making wise financial decisions. If you decide to save and invest in your financial life, you will save the need to worry and invest in a richer college experience in the long run!

Your future!

The last reason to budget today is to start setting yourself up for the future. Budgeting is as important for health as getting sleep and eating well because it brings peace of mind.

Falling into debt traps at the beginning of life can have serious consequences. That college experience is great, but you won’t enjoy life afterwards if you’re drowning in student loans and credit card debt.

You will also regret not investing early if you have long term goals, such as buying a house or car or going back to school. Plan for these goals with budgeting in the present to ensure you have an enjoyable future. 

Why And How To Set Up An Emergency Fund

So how exactly does one budget? In order to effectively budget as a college student, you must first recognize your financial goals!

While most college students can pinpoint tuition payments as their main financial strife, financial goals go beyond simply spending money to pay for things you need and/or want.

To determine your financial goals, you must think of your strategy. How do you define what you invest into the future? Are you happy with your day-to-day spending habits?

Let’s think of your financial life in the same way we see a business. You have expenses, income to pay them with, and goals you have for the near and far future. Let’s break apart our management strategy into three simple subcategories: strategic, tactical, and operations management.

Strategic Financial Management

Strategic financial management is a company finance term, but managing our financial life is like managing a business! Strategic financial management means not only managing your finances but also managing them with the intention to succeed.

To do this, you must define your main goals and objectives for yourself. Where are you right now? Where do you want to go? What do you want to do?

Now, this may sound like regular financial management, but the key differentiator is the word strategic. While regular financial management is in charge of keeping up with your short term goals, such as paying rent on time, paying off that car lease, or finding the best ways to efficiently buy groceries, strategic financial management is also continuously evaluating, planning, and adjusting to keep you focused and on track toward long-term goals you may have.

Have you ever thought about paying your first mortgage? What if you have goals for grad school? You can even think about investing into a retirement fund to retire early if you wanted.

In conclusion, strategic financial management is defined by your financial goals, your current situation, and your overall money philosophy. 

Tactical Financial Management

Tactical Asset Allocation (or for our purposes, tactical financial management) plays off of strategic management. According to Thane Yost, “The will to win is useless if you do not have the will to prepare.”

Tactical financial management deals with the systems you set up to deal with regular money flow and your individual financial decisions. Your way of management in the tactical field will also help to mold and readjust any goals you have in your strategic financial management.

Let’s say one of your long term financial goals includes retiring by the age of 50. Your strategic financial management is what defines that goal while tactical financial management creates your plan to get there.

Perhaps that means investing in a stock fund you only pitch into when it’s time to retire. Or you may put aside a certain amount each month to ensure a secure fund by the time you’re 50.

Planning out your financial goals is crucial in actually achieving them, so tactical financial management is a step you do not want to ignore!

Operations Financial Management

Operations financial management is the last but most important part of your management strategy. Operations management plays into your day-to-day money details, mostly around your spending habits.

When you get that paycheck, it’s wise to track how much you spend daily. That daily takeout, coffee, and Uber ride can really add up in the end!

Make sure you are not spending unnecessarily, and put that money forward to save for more important things, such as loans, investments and recurring expenses.

To understand how much you earn and spend, you need to organize your income, spending, and savings into a visual you can comprehend, update, and track accordingly.

Taking the time to write down your expenses and earnings will give you a clearer picture of how much you have, and how much you can spend. It can also help you track growth as a budgeter.

Unfortunately, there’s no one-size-fits-all approach to organizing your budgeting, particularly because everyone’s budgeting is different and unique to their own situations. However, it’s important to choose the budgeting tool that works best for you.

How To Open Up Your First Bank Account

Spreadsheets, software, and apps offer different approaches to tracking your money, which includes how much time you will have to invest in keeping up with it. As a college student, you do not have the time to play around with elaborate and expensive budgeting software. Here are four personal yet free and low maintenance organizing tools you can use for your budgeting.

Google Sheets

My personal favorite! Google Sheets allows you to organize your finances in spreadsheet form. While you have to manually input their expenses, there are some budgeting templates that offer preset categories.

Third-party add-on software is available on certain templates to import your banking transaction data. Don’t worry! Google Sheets is very secure.

Unless you have shared your Google Sheet with someone, nobody can access your files without your Gmail account username and password. Google also offers two-factor authentication to protect your finance information.

Although Google Sheets requires users to manually input transactions and other data, unless you use a third-party add-on, there are many upsides to it being so hands-on. Google Sheets is free to use with your Gmail account, making it a cost-efficient way to track your finances.

Google Sheets can be accessed from anywhere via the mobile app on any device, so its hands-on approach forces users to think about each transaction they make.

Mint: The Smartphone App

Mint is a popular budgeting app that is all the craze with college students. Mint tracks your income, expenses, savings goals, credit score, investments, and even your own net worth!

Mint is offered in both the App Store (for iOS) and on Google Play (for Android), making it accessible for most college students with phones. While Mint categorizes your expenses automatically, users can modify it to fit their own comfortability.

Mint allows you to link your bank account and credit card information, and with Mint offering Verisign scanning, multi-factor authentication, and Touch ID mobile access, you can be assured that all financial information is secured.

Users can create savings goals and track investments through Mint’s simple organization designs. Mint also customizes personal alerts when you go over budget, when you make large transactions, when there are ATM fees, etc.

It also gives you bill payment reminders and has a credit score monitoring service. For the beginner budgeter, Mint offers blog and education tools, such as a loan repayment calculator. Best of all: Mint is FREE to use! 

Goodbudget: The Smartphone App

Ever heard of the “envelope method” where you put a certain amount of cash in specifically labeled envelopes that are dedicated to certain expenses (ex: “Rent” envelope, “Rainy Day Fund” envelope, etc)?

Goodbudget took this method to the next level. Now, instead of keeping your envelopes in that old shoebox, you can have access to your organized envelopes in the palm of your hand.

Goodbudget allows users to plan their household’s spending through the envelope method and tells users they are only supposed to spend what’s in their envelopes. If they go beyond their budget, the envelope will show red to indicate that they overspent.

Goodbudget has a web-based version and is also offered in both the App Store (for iOS) and on Google Play (for Android). While you need to upgrade to Goodbudget Plus, which is $7 per month or $60 per year, for the full experience, you can get 20 envelopes for FREE and use them unlimitedly. However, the subscription to visualize your spending and prioritize meeting different goals in an unlimited amount of envelopes just might be worth it.

Users can customize the envelope categories according to their needs, such as saving for an emergency fund or a vacation. By requiring manual entry of your data, this helps to analyze spending habits versus it being automated (users can also download their recent activity from their bank’s website and import that into Goodbudget).

The Goodbudget app provides real-time updates of how your transactions impact your budget and personalized reports. It also offers educational resources like a blog, podcast, and online courses you can take to further help you become a better budgeter.

The app plans to launch a pandemic-inspired feature, allowing people to prioritize “envelopes” based on their most urgent expenses, such as housing, utility bills, etc.

Lastly, Goodbudget is extremely safe to use. Its security features, which includes 256-bit bank grade encryption in a secure data center, ensure that all of your finances are secure. 

Personal Capital

Do you have more experience with budgeting and are now looking for more support in investing? Personal Capital is for you! Personal Capital is a budgeting app and investment tool that tracks both your spending and wealth.

While this isn’t your typical budgeting app, it is perfect for those with more experience saving and more desire to invest. Personal Capital is free to use, but users have the option to add investment management services for 0.89% of their money (for accounts under $1 million).

Personal Capital includes a money-tracking dashboard, a net-worth tracker, and a breakdown of your investment portfolio. This is beneficial if you are interested in tracking your greater financial growth. 

While it doesn’t have as many tools as other budgeting apps, Personal Capital still offers free investing tools, such as a retirement planner, education planner, and fee analyzer to check portfolio fees. It also offers a daily Capital blog for financial planning tips.

This app syncs to your bank accounts and credit cards as well as other financial accounts and securely holds your information. Features include data encryption, fraud protection, and strong user authentication.


As you can see, there are many resources you can use to make sure you get the most out of organizing your budget.

Remember the most important thing: your budget is unique to YOU! Don’t let other influences make you uncomfortable with the way you budget. 

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