When you graduate high school and head off for your first year of college, you will most likely be managing money by yourself for the first time. Financial independence can come with a steep learning curve, but effectively managing your money throughout college can lay the groundwork for a successful future. By budgeting, tracking your spending, and committing to specific savings goals, you can be well on your way to gaining financial security.
Let’s take a look at four budgeting strategies that can help college students stay on the right track financially:
- Assess your income. Make it a point to know how much money you have coming in each month, whether that be from a part-time job, your parents, grants, scholarships, or side gigs. Then, compile a list of all your fixed monthly expenses, such as rent, utilities, internet and phone bills, streaming services, and car insurance. You’ll also want to estimate your variable expenses, which will include things like groceries, entertainment, gas, public transportation, school supplies, clothing, and personal care. Ideally, you should also earmark a portion of your monthly income for savings. Be sure that your anticipated expenses do not exceed your expected income. If they do, you’ll need to cut back on your spending, or find additional sources of income.
- Be smart with credit cards. It can be tempting to spend more than your budget allows when you have a credit card. A credit card can seem like free money, but it’s important to understand how credit card debt can pile up and prevent you from reaching your future financial goals. Remember to only charge what you can afford to pay off in full each month. If you only make the minimum payments on your credit card balance, interest charges will start to snowball. Racking up credit card debt during college can harm your credit score, making it difficult (and more expensive) to take out a personal loan, purchase a car, or buy a house later on in life.
- Plan ahead for big expenses. If you know that you will have sizable one-off expenses in the foreseeable future, budget for them now. For instance, if you know that your car is getting up there in miles and could break down, start putting money away for repairs or a new car. Likewise, if you know there’s a chance that you’ll need to move off campus next year, start saving for a security deposit and first and last month’s rent. Planning now will help you avoid having to put a major expense on a credit card, which could severely hinder your financial progress down the road.
- Save as much as you can. It can be hard to save money when you’re in college, especially when your funds are limited. But you don’t have to save hundreds of dollars each month to start building a nest egg. There is no amount too small when it comes to saving. One of the easiest ways to save money is to identify ways to do things cheaper. Here are some ideas:
- Shop around for the best phone and internet rates, and switch providers if necessary.
- Eliminate recurring costs that you don’t actually use or could do without. These could include gym memberships, cable TV, audiobook memberships, and streaming services.
- Use coupon apps when shopping, and shop at discount retailers and grocery stores.
- Ask about student discounts. Many retailers offer discounts to students with a valid student ID.
- Avoid unnecessary fees. The less you’re paying for fees, the more money you’ll have to save. Avoid tickets by not speeding or parking where you shouldn’t. Stay clear of late payment fees by paying your bills on time. If you’re currently paying a monthly fee for a checking or savings account, switch to one that doesn’t charge a maintenance fee or slap you with a charge for not meeting a minimum balance. Likewise, don’t use foreign ATMs that charge a fee. There are plenty of student-focused checking accounts out there that don’t charge unnecessary fees.
College is a huge adjustment with a lot of responsibilities. In addition to studying and writing papers, you might also be learning how to cook or do your own laundry. It might be tempting to put financial considerations on the back burner, but it’s important to remember that how you manage your money now will have a direct impact on your future financial stability. The good news is that with a little budget planning, smart spending, and commitment to saving, you can finish financially at the top of your class.