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Student Loans Student Loan Repayment

Budget for Student Loans: How to Make a Plan & Stick to It

Updated May 12, 2023   |   6 mins read

If you are trying to determine how to budget for your student loan payments, you’re not alone. According to the Education Data Initiative, nearly 43 million U.S. borrowers have student loan debt, with the total debt per borrower averaging over $40,000. Depending on how much you owe, your student loan payments could be hundreds of dollars each month.

While the pandemic-era payment pause is extended until summer 2023, being proactive about budgeting for student loans can help you stay on track. Find how to create a budget, and several tips to stick to it. 

In this guide:

How to make a budget

Budgeting might seem overwhelming, but it gets more straightforward when you break the process down into manageable steps. This five-step process will help you get started. 

Step 1: Determine which tool you’ll use to manage your budget

There is no shortage of tools to help you create and manage your budget, from full-featured mobile apps to a good old-fashioned spreadsheet. The right tool can help you stay committed to budgeting. 

One of the best free apps available is Mint, which syncs with your financial accounts and tracks your spending by category.

You can personalize the categories and establish spending limits for each, and the app notifies you if you’re getting close to your limits. It also offers features including bill negotiation to help you save even more. While setting it up requires effort, Mint makes it easy to keep up with your budget for the long term. 

If you’d prefer a simpler, low-tech budgeting method, you can opt for an Excel spreadsheet or Google sheet instead. Just keep in mind you’ll need to input your monthly income and expenses. If you’re comfortable with this method, it should work just fine.

Step 2: Determine your monthly income

Once you’ve found a budgeting tool that works for you, it’s time to determine your monthly income. For the purposes of your budget, it makes sense to use your monthly take-home pay instead of your gross income. This lets you track the earnings hitting your bank account each month. 

If you have more than one job or a side hustle, be sure to account for that when determining your income as well. For instance, if you earn $5,000 in take-home pay each month and $400 from a side gig, use a total income of $5,400 per month.

Step 3: Track your spending

The next step is to track your spending. An app such as Mint could make this step easier, as it links up to your checking, savings, credit card, and billing accounts to track your spending. 

If you’d rather use a spreadsheet, you’ll input your expenses by breaking them down into categories that make sense for you. 

For instance, your spending categories might include utility bills, gas, groceries, entertainment costs, dining out, child care, rent, and student loans. 

Step 4: Balance your budget

Once you’ve figured out your total monthly income and expenses, it’s time to balance your budget. This step helps you determine whether your monthly income exceeds your monthly expenses. Again, an app can help with this. 

In an ideal world, you’re bringing in more money than you’re spending. But it doesn’t always work that way. If you find your budget is unmanageable, look for areas where you can cut costs. For instance, you might consider dining out less or taking steps to reduce your utility bills. 

If your income exceeds your expenses by a fair amount, consider putting extra money toward student loan repayment. This will help you save on interest charges and repay your balance faster. 

But it could make sense to pay down higher-interest debt first, even if it means changing your student loan repayment plan temporarily. For example, if you’re carrying $10,000 worth of credit card debt with a 21% APR, prioritizing that debt over your student loans might save a lot of money on interest. 

Step 5: Revisit your budget

Your budget should be dynamic, not static. Make a plan to revisit it every six months or when your income and expenses change. If you get a new job and you’re earning a higher salary, for instance, look at your budget again to determine how to allocate that extra cash. 

You might decide you want to put more toward your student loan payments or save for another purpose, such as a family vacation or a retirement nest egg. 

How to stick to your budget

Sticking to your budget starts with choosing a tool that makes sense for you. If the tool you’re using feels like a hassle or a headache, it could be difficult to keep up with your budget. 

An app that helps with automatic tracking can be useful. Here are five additional tips that can help:

  • Watch out for impulse buys. Instead of buying an item right away, take a day to think about the purchase and whether it’s something you need.
  • Plan your meals and stick to a list. Meal planning and making a list can help keep your grocery bills manageable, as you’ll know exactly what you’ll need to buy. Also, don’t shop while hungry!
  • Track your utility costs. Gas, electric, and water bills can get expensive. To stay on track, consider paying closer attention to how you’re using utilities each month. For instance, you might turn the heat down by a few degrees or remind your family to shut off lights when they aren’t using them. 
  • Pay yourself (and your bills) first. Consider automatically funneling money to your savings account and monthly payments, including student loans, utility bills, and credit card payments. 
  • Review your budget every month. Consider doing this at the same time you pay bills. Looking at your budget each month will help you understand how your finances are doing and where you can make improvements.