Figuring out how to build a budget

figuring out how to build a budget

Think you’re spending too much? Here’s how to plan, using what the average college student spends on living expenses.

You’ve probably heard the stereotype that college students live exclusively off ramen to maintain notoriously tight budgets, but that doesn’t have to be the case.

It’s true that being a college student can be expensive, with the average student spending close to $53,000 on rent, transportation, and personal expenses throughout their four-year college career — which is 12% more than the amount they spend on academic needs like tuition and books.1 And despite the uncertainty caused by the pandemic, back-to-school spending by college students continued to rise from year to year.2

As you begin your financial journey (and even when you’re a seasoned pro), regularly paying attention to your spending habits and putting together a budget that works for you can help you stay on top of your income versus your expenses — and allow you to splurge on something besides ramen from time to time.

Here are seven steps to building a budget as a student.

1. Calculate how much money you’ll have

The first step in creating a budget is identifying all of your income sources and deciding if you want to track your budget weekly, monthly, or quarterly. It will likely be a combination of all three because for each source of income, you’ll want to note when you’ll be paid and how much the payment will be. That way, you can accurately break down your total income into something more manageable — like a monthly budget, for instance. That provides your baseline as you move to the next step.

The combination of income sources will be unique for each student. But if you want to know generally how your situation compares to others, here are some broad averages: The largest portion of college costs (44%) are paid for with parents’ income and savings. Next up, scholarships and grants pay for 25% of students’ costs. Student loans pay for 13%, and the remaining costs are covered by student savings and income, parent borrowing, and gifts from relatives.3  

Your goal is to match your income against your scheduled expenses to help ensure you’ll be able to cover the essential ones like tuition, books, transportation, and housing. Then, see how much you have left for discretionary spending, such as entertainment, clothes, charitable giving, etc.

2. Make a list of your expenses and when they’re due

Your college costs likely include a mix of essential and optional spending. You’ll want to create a list of the essential costs, and when those bills are due, to make sure you have a plan to cover things like tuition, books, housing/rent, utility bills, etc. Then you can get a glimpse of how much you have left for optional things like entertainment.

It can help to keep records of your spending so that you can get a sense of your monthly costs, as well as the impact of periodic expenses such as holiday travel. Over time, this will help you get a detailed picture of your daily, weekly, and monthly expenses.

Another good way to make budgeting predictions is to track your past spending habits, from big-ticket items (like car payments and credit card bills) to the small stuff (like last-minute lunches or coffee).

3. Determine if you have a gap between income and expenses

Once you’ve got your income and expenses written down, look at where your expenses are higher than your income.

You have two options for closing gaps in your budget: You can either find more funds or reduce your expenses. To find more funds, you might take an additional job or replace your current one with something that pays more. For tuition costs, you could apply for additional scholarships. Make taking out additional student loans your last resort to close a gap.

To help reduce expenses, you could consider cutting any extras and splurges out of your budget, sharing rent costs with a roommate (or two), or shopping around for deals on expenses like your phone plan.

4. Be clear on needs versus wants

A need, or essential expense, is something important that you can’t get by without during the semester — for example, housing, groceries, and transportation to class. Wants are things you could go without, even if they make you happy or enrich your college experience.

Remember, wants and needs can seem very similar, but as you make day-to-day decisions, know your numbers. For example, eating — that’s essential. But the average monthly grocery bill for college students is $250, or $3,000 a year, and the average that a student spends on restaurant meals each month is just over $340, or almost $4,100 a year. Even if you spend twice as much on groceries each month to avoid eating out, you’ve potentially reduced your food costs by $1,100 a year.

Clothes, restaurant meals, entertainment, hobbies, and club memberships are enjoyable, but they are expenses that you may need to reduce or cut if you have any budget gaps. Your future self will thank you.

5. Create a budget template that works for you

When you know your income and expenses, you’ve set your spending priorities, and you’ve determined needs versus wants, you have the information you need to create your personalized college budget. This clear, accurate breakdown of how your money should be coming in and going out during the semester will give you better control over your spending, and tracking your performance against your budget weekly and monthly will help you stay on course so you can reach your financial goals. Plus, it lets you create a plan to build your savings — which will help you develop a financial cushion for any unexpected expenses. If you need a template, you can download the college budget worksheet to get started.

6. Stick to your plan and track your expenses

Once you’ve got your budget, you should refer to it often and make adjustments as needed. Start by keeping track of your daily and weekly expenses to get a handle on what you’re spending and where you’re spending it; then use that information to help refine and execute your plan. For example, you might be able to adjust your transportation. College students spend an average of $2,800 on transportation over four years at college,4 but many students minimize these expenses by walking or biking as much as they can.

Simply put, budgeting is projecting (and controlling) how much you’ll spend. If you’re a Wells Fargo customer, using Budget Watch could help you automate the process of tracking your spending and setting up budget goals. And Wells Fargo My Money Map can be a helpful way to start mapping and categorizing your spending.

7. Revisit your budget, using guardrails to prevent overspending

Income, expenses, and budgets can change often while you’re at college. With that in mind, you’ll want to make a habit of reviewing your budget regularly. It’s helpful to review it at the end of each week until you’re comfortable that it’s working for you, at which point you could consider doing fewer reviews — but still, at least once per month is a good idea.

As part of this review, be sure to look at the details of your bank account not only to get a sense of your cash flow but also to protect yourself against any suspicious or fraudulent activity. You may want to consider using a debit card so you can easily track your purchases. Wells Fargo Account Alerts5 are excellent tools to help you stay on top of your account activity. Plus, you can use Control Tower® to get an overview of your recurring payments and cut unnecessary costs.

You can also automate certain things to make sure you’re paying the expenses you’ve budgeted for. A couple of examples of automated money tools are Bill Pay, which can connect to your checking account, and automated transfer to savings.

If you’re still having trouble keeping your spending on plan, consider ways to challenge yourself. One way you could help make your budgeting fun is to partake in a no-spend challenge, even if it’s just for a day. Like one of our writers, you might decide you like the challenge so much that you extend it for a month!


1. “College Student Spending Statistics and Facts — 2020,” Admissionsly.com, June 12, 2020.

2. “Coronavirus could push back-to-school spending to record level as uncertain families gear up for at-home learning,” National Retail Federation, July 15, 2020.

3. “How America Pays for College 2020,” Sallie Mae, 2020.

4. “College Student Spending Habits for 2021,” Lexington Law, 2021.

5. Sign-up may be required. Availability may be affected by your mobile carrier’s coverage area. Your mobile carrier’s message and data rates may apply.

How to create a budget in three steps

Watch how real college students budget for the semester and manage their money.

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