Budgeting 101 for College Students

With my youngest son in college, I appreciated Karen Ramola’s article last month with financial tips and tools for parents and their college students. It is a good reminder your community banker can be a resource for more than your everyday banking transactions.

Building on last month’s article, I’m going to lead us through College Budgeting 101 for students’ daily living.

Clarify and Communicate

Like every class, let’s start with setting expectations.

Determine what financial support will be provided, whether from parents, financial aid or student loans. It’s crucial for both students and parents to define financial responsibilities for expenses like tuition, rent, groceries and more to avoid misunderstandings and financial stress.

It may take students time to learn how to stretch money between paydays, whether from parents or a job. Parents, be patient. Students, keep trying. Together, have a plan to bridge potential gaps.

Itemize and Prioritize

Time for some homework. Students, list your anticipated monthly and one-time expenses, such as those you’ll likely to incur at the beginning of a semester. Expenses might include books, off-campus food, class supplies, clothes, ink for your printer, club or athletic fees, etc.

Next, tally your income from a part-time job, parents, student loans or other sources. If your income and expenses are out of balance, go back to your expenses. Prioritize spending money on what’s needed versus what you want. I said to my older kids when they were in school, “live like a college student now, so you do not have to live like a college student later.”

Track and Adjust

Study your spending habits with your community bank’s mobile app or another budget tracking app. These tools categorize your purchases to help you compare your actual spending with your planned expenses. This will help you identify areas where you might be overspending and any adjustments that may be needed.

In Case of Emergencies

One unexpected expense can cause financial hardship for students on tight budgets. Many post-secondary institutions offer financial counseling services and emergency services to help students facing serious money challenges. I hope you never need it but it’s reassuring to know there’s a safety net, just in case.

Students who are fortunate enough to have extra money at the end of the month would get an A+ from me if they put that surplus in an emergency fund. It’s like a little extra credit “in the bank.”

Kari Johnson is an Assistant Vice President and Prior Lake Branch Manager for New Market Bank. She has been a community banker for more than 15 years, helping individuals, families and small businesses leverage their financial resources in pursuit of their dreams.