When you’re a college student living away from home, making sure you don’t run out of money starts with knowing where your money is going and prioritizing your spending.

Yes, that means having a budget.

A budget is really just a tool you use to meet your financial goals, says Betsy Mayotte, director of consumer outreach and compliance for American Student Assistance, a nonprofit organization that provides financial education to college students. Your goals can be everything from having enough to pay for food to saving up for a spring break getaway.

Using a budget is also a good way to develop important financial skills and avoid relying on credit cards or overdrafting your checking account when you come up short. “This is the time to start establishing good money habits,” says Mayotte.

Budgeting sounds tedious, but it doesn’t have to be. The best budget—and one you are most likely to stick to—is simple and easy to execute, says Mayotte. You don’t need to balance your checkbook every month (do people even do that any more?) or track every single penny. And there are plenty of apps that can make managing your money easier.

But you do need a plan. Here’s how to budget as a college student.

Budgeting Basics

  • Know your cash flow. People who budget typically do it monthly, but it makes more sense for students to build a spending plan around each academic period. First, tally up the money you expect to have for the semester. It’s likely to be “lumpy.” You may have a chunk from savings or refunds from financial aid (that’s money left over after loans, scholarships, and grants are applied to your tuition, room, board, and fees) at the start of the semester and some regular income from your parents or a job.
  • Track your spending. Next, figure out what you spend in a typical month. Look at your debit card, bank account, and credit cards over the last few months to see where your money is going and what big-ticket items popped up. Once you see what you've been spending money on, you may be surprised at how much is on nonessentials.
  • Identify your needs and wants. Now comes the hard part: Categorizing your spending into two buckets, needs vs. wants. Needs are staples like clothing, housing, school gear, food, and transportation. Wants: concert tickets, your second soy latte of the day, beer, and that spring break plane ticket.

    But it’s not always clear when a need is a want. You need to eat, but are you spending a lot on pizza deliveries instead of using your meal plan? You want to go home for the weekend, but do you take the more expensive train or buy a cheaper bus ticket? Mayotte says an emergency fund should be built into your needs budget so that you have extra in case something big comes up, like a car repair.

The point of budgeting is not to stop you from spending money on nonessentials. Rather, it’s to make sure your must-haves are covered first so you know how much you have left for the fun stuff.

A good rule of thumb: Keep discretionary spending (wants) to 15 percent or less of your monthly budget, says David W. Mullins, a certified financial planner in Richlands, Va. “This will allow for some fun, while keeping your spending disciplined.”

Automate Your Money Management

Once you prioritize your spending, you can use apps to make budgeting simple. “It's never been easier to track your spending and create budgets that will keep your spending in check,” says Mullins.

Mint is one of the most popular and comprehensive budgeting apps, says Mullins. It syncs with your bank account and automatically buckets your spending into different categories that you set up. It can even send an alert when a budgeted category is close to exceeding its limit, says Mullins.

American Student Assistance has a simple budgeting tool and a calculator that shows you how cutting back on small expenses like coffee and takeout can really boost your savings over time.

And the Department of Education's federal student aid office offers a number of resources on budgeting for college students.

It’s also helpful to separate your money into two accounts, one for variable expenses and another account for fixed expenses, says F. Reid Hartsfield, a financial planner in Jacksonville, Fla. That way you won't deplete the money you need for must-pay bills like your rent or car insurance. And when you need money for a night out, you can take cash or use a debit card tied to the account with your variable money. “It’s a simple concept for college students,” Hartsfield says.