Budgeting as a college student

Your child’s time at Carolina is a time in which they’ll learn more about becoming a self-sufficient adult – and financial independence should be no exception. Thankfully, budgeting is a good way to ease them into being more aware of their finances.

The good thing is that it’s simple to start doing. Helping your student with budgeting is a great first step to managing money more responsibly, and there are many tools that can get you started.

Managing finances

The Federal Student Aid Office offers some core advice – overestimate your expenses and underestimate income. It’s always better to end up with a surplus because you need less money than you expected. Get your student an early start on good habits by encouraging them to put extra money into a rainy-day fund.

Goal-based saving is actually one of the best ways to work toward a financial goal. It all depends on what your student wants to do. Saving up for spring break? Put a little bit away from the start of the school year. Looking ahead to car/rent/mortgage payments as a senior? Put money toward different individual goals as you track them together.

Separating wants and needs is also important. It’s totally fine to spend money on wants, as long as it’s tracked. In fact, some students find that with a detailed budget in place they have more money they can comfortably use for fun things.

Find time to sit down with your student and make a list of things they want to save for and rank them by priority. This will help them see what they want to allocate the most funds to, start teaching them the value of saving, and deter frivolous spending.

Starting out

Getting a budget off the ground is the most difficult part; after that it’s just about sticking to it. UNC Affordability links a good beginning guide. 

Help your student write down what they expect to spend in different categories like housing (rent/utilities), transportation (gas/insurance/etc.), food and personal stuff. Where money goes will depend on the person, so it’s important to tailor this to your student’s needs and make sure they have a voice in their budget.

It’s a good idea to get a general grasp of what the cost of living in Chapel Hill is like. Rent varies widely depending on if your child lives in campus dorm or in an off-campus house or apartment – but you’ll know how much you’re paying! Even if your student lives off-campus, most places will cover water, leaving you with cable, WiFi, and energy for utilities. Payscale lists the average monthly energy cost as $153 per month, and depending on your package WiFi and cable could run about that much or a good bit below if you’re willing to cut a cord or two.

After you and your student get a general idea of what will be spent in a month, you enter the tracking phase. Over the span of a month, your student should keep as detailed a log as possible of what they actually spend. After the month is done they’ll be able to look and see how close they stuck to budget and what might need to be adjusted. 

It’s a good idea to stay involved, at least for the first few months, to offer guidance on how your student can adjust their budget. Eventually, though, the goal is for them to be financially independent so, once their budget is figured out, it’s time to trust their judgement. 

There are also multiple ways to set the actual money aside. The timeless technique of putting actual cash into labeled envelopes is a good way to see your money situation more clearly, but it’s not for everyone. 

• Wells Fargo, which has a branch right on Franklin Street and an ATM at the Student Stores, has a guide to budgeting in school and offers budgeting services like their My Spending Report tool.
• Mint offers a free service that syncs with a bank account and automatically categorizes purchases. 
• Pocketguard simplifies the process and shows you how much spending money you have after accounting for expenses. 
• Clarity Money, Goodbudget, and Personal Capital all have popular free tracking options – there are a lot of choices out there.

Form lifelong habits

Many people don’t ever put much consideration into the nitty gritty of their financial situation. Set your college student up for a lifetime of fiscal responsibility by working together to lay the foundation of good budgeting habits.