The IFCU Blog

Heading off to college is an exciting time, but it also comes with new financial responsibilities. Budgeting for college is essential to ensure you can cover your expenses and make the most of your college experience without accumulating excessive debt. This guide will help you understand the typical expenses you may incur, explore income alternatives, and provide strategies to manage your finances effectively using the 60-20-20 rule.

Common College Expenses

As a college student, you'll encounter a variety of expenses. Here are some of the most common ones:

1. Tuition and Fees

   • Tuition: This is the cost of attending classes and can vary significantly depending on whether you attend a public or private institution, and if you're an in-state or out-of-state student.
   • Fees: These include additional charges for labs, student services, technology access, and other mandatory costs that can add up quickly.

2. Housing

   • On-Campus: Living in dormitories or campus housing can be convenient and sometimes cost-effective, with utilities often included.
   • Off-Campus: Renting an apartment or house off-campus can offer more independence but requires budgeting for rent, utilities, and possibly commuting costs.

3. Meals

   • Meal Plans: If you live on campus, you might purchase a meal plan, which provides a certain number of meals at campus dining facilities.
   • Groceries and Dining Out: For off-campus living, budgeting for groceries and occasional dining out is necessary. Cooking at home can be a cost-effective option.

4. Textbooks and Supplies

   • Textbooks: New textbooks can be expensive. Consider renting or buying used books, or using digital versions to save money.
   • Supplies: This includes notebooks, pens, lab materials, software, and other course-related items.

5. Transportation

   • Public Transportation: Many campuses offer discounted or free public transportation for students.
   • Car Expenses: If you have a car, you'll need to budget for gas, maintenance, insurance, and parking permits.

6. Personal Expenses

   • Day-to-Day: This includes laundry, toiletries, clothing, and other personal items.
   • Entertainment: Budget for social activities, streaming services, and other leisure activities.

7. Health Insurance and Medical Expenses

   • Insurance: Ensure you have adequate health insurance coverage. Some colleges require students to have health insurance and offer plans you can enroll in.
   • Medical Expenses: Budget for co-pays, medications, and other health-related costs.

8. Technology

   • Essential Devices: A reliable computer, necessary software, and internet access are crucial for coursework and research.
   • Accessories: Don’t forget to budget for accessories like printers, headphones, and backup drives.

Income Alternatives for College Students

To manage these expenses, consider the following income alternatives:

1. Part-Time Jobs

   • On-Campus: Jobs such as library assistants, campus tour guides, or student union workers often offer flexible hours that accommodate your class schedule.
   • Off-Campus: Retail, food service, and other local businesses near campus may have part-time opportunities. These jobs can also provide valuable work experience.

2. Work-Study Programs

   • Eligibility: These programs provide part-time jobs for students with financial need. The jobs are often related to your field of study and are designed to be manageable alongside your academic commitments.
   • Benefits: Earn money while gaining experience and networking within your college community.

3. Scholarships and Grants

   • Merit-Based: Scholarships based on academic achievement, athletics, or other talents.
   • Need-Based: Grants provided based on financial need, often by the government or the college itself.
   • Finding Opportunities: Use scholarship search engines, consult your high school counselor, and regularly check your college’s financial aid office for new opportunities.

4. Student Loans

   • Federal Loans: Typically offer lower interest rates and more flexible repayment options than private loans. Subsidized loans don’t accrue interest while you’re in school, while unsubsidized loans do.
   • Private Loans: Should be considered only after exploring all federal loan options. They often have higher interest rates and less favorable repayment terms.

5. Internships

   • Paid Internships: Offer a way to earn money while gaining relevant experience in your field of study. Look for opportunities during summer breaks or even part-time during the school year.
   • Unpaid Internships: While they don't provide immediate income, they can lead to job offers and valuable networking opportunities.

6. Freelancing or Gig Work

   • Utilize Skills: If you have skills like writing, graphic design, coding, or tutoring, consider freelancing on platforms like Upwork or Fiverr.
   • Flexible Schedule: Gig work can be done on your own schedule, allowing you to balance it with your academic responsibilities.

Budgeting with the 60-20-20 Rule

The 60-20-20 rule is a simple budgeting strategy that can help you manage your finances effectively. Here's how it works:

• 60% Needs: Allocate 60% of your income to essential expenses, including tuition, housing, meals, textbooks, and transportation.

  • Prioritize Essentials: Make sure the majority of your budget covers the costs that are absolutely necessary for your education and living.
  • Track Regularly: Keep a close eye on these expenses to ensure they don’t exceed your allocated 60%.

• 20% Savings: Dedicate 20% of your income to savings. This can include an emergency fund, savings for future semesters, or long-term savings goals.

  • Emergency Fund: Set aside money for unexpected expenses such as medical emergencies or car repairs.
  • Future Goals: Save for upcoming semesters, study abroad programs, or initial post-graduation expenses.

• 20% Wants: Use the remaining 20% for discretionary spending, such as entertainment, dining out, and personal expenses.

  • Enjoy Wisely: It’s important to enjoy your college life, but do so within this budget to avoid financial stress.
  • Evaluate Priorities: Regularly review what you’re spending on “wants” to ensure it aligns with your values and enhances your college experience.

Additional Budgeting Strategies

1. Create a Detailed Budget

   • Income vs. Expenses: List all your income sources and expenses. Use a spreadsheet or budgeting app to track your spending and adjust as needed.
   • Regular Review: Review your budget monthly to ensure you’re staying on track and make adjustments if necessary.

2. Use Budgeting Apps

   • Mint: Helps you track your spending, set budgets, and receive alerts for unusual transactions.
   • YNAB (You Need A Budget): Encourages proactive budgeting and planning for future expenses.
   • PocketGuard: Shows how much disposable income you have after accounting for bills, goals, and necessities.

3. Take Advantage of Student Discounts

   • Retail and Services: Many stores, online services, and local businesses offer discounts to students. Always carry your student ID and ask about available discounts.
   • Subscriptions: Services like Amazon Prime, Spotify, and Apple Music offer student pricing, which can significantly reduce your costs.

4. Cook at Home

   • Meal Planning: Plan your meals for the week and make a grocery list to avoid impulse purchases.
   • Batch Cooking: Prepare meals in bulk and freeze portions for later use, saving both time and money.

5. Rent or Buy Used Textbooks

   • Online Platforms: Websites like Chegg, Amazon, and eCampus offer rental and used textbook options.
   • Campus Bookstores: Check if your college bookstore offers rental services or has a used book section.

6. Limit Credit Card Use

   • Avoid Debt: Use credit cards sparingly and only for planned expenses. Pay off the balance each month to avoid interest charges.
   • Build Credit: If used responsibly, a credit card can help you build a credit history, which will be beneficial after graduation.

7. Find Free or Low-Cost Entertainment

   • Campus Events: Attend free events on campus, such as movie nights, concerts, and guest lectures.
   • Local Attractions: Explore free or discounted local attractions, parks, and community events.

Revisit Your Budget

Revisiting your budget monthly is crucial until you develop a system that suits your needs. Track your expenses by saving receipts, pay stubs, and account statements, and review them at the end of each month. Compare your earnings with your expenditures to identify patterns. You might discover that you're spending more on food than anticipated or that you have the potential to save more. If your budget needs adjustment, consider:

• Tutoring, dog walking, or selling your textbooks back to the bookstore for extra cash
• Walking, biking, or catching rides to places instead of driving
• Being a rideshare or delivery driver on the side

Don’t Be Afraid to Ask for Help

Managing your finances takes time and effort, and it can be challenging. If you need assistance, consider:

• Reaching out to your college for information on student resources and programs
• Speaking with your financial institution for guidance or solutions for your situation
• Asking financially savvy adults close to you, like your parents or older siblings, for advice

Taking It Home

Use your budget to create a financial plan. When opening new accounts, choose financial services and products that best suit your lifestyle. For instance, if you travel frequently, you may benefit more from a credit card with a rewarding miles program instead of a conservative cash-back program. Continuously educate yourself about financial strategies that can optimize your savings and disposable income.

As you prepare for your college years, remember that your education is an investment in yourself, providing unforgettable experiences and opening up opportunities for the future. The budgeting skills and life lessons you’ll learn along the way can help you succeed for the rest of your life.