For many, college presents the first opportunity to be in charge of your own finances. It is often the time you break away from your parents’ economic influence and start making some of your own financial choices. Of course, this can come with some potential challenges, so it's important to have a plan. Here are some tips to help you avoid financial pitfalls and start out adulthood on good fiscal footing:
1. Create a Budget. If you are not already using one, you should establish a personal budget that you can live on while attending school. Start by identifying how much money you have coming in each month – whether it be from a job, financial aid, or parental support. Next, compile a list of your monthly bills and expenses such as food, toiletries, and school supplies. Lastly, add up your expenses to see if you have enough income to cover them. If you don’t, you’ll need to adjust your expenses, eliminating those that you don’t truly need. Ideally, you should aim to have some leftover budget each month that you can set aside for emergencies and your general savings goals.
2. Keep Track of Your Finances. After determining what your budget should look like, it’s important to get in the habit of tracking your finances to ensure you are staying as close to your budget as possible. Check your bank account and credit card activity regularly to ensure you are not overspending, and adjust your spending habits accordingly if you find that you are.
3. Be Smart Using Credit Cards. While credit cards can be extremely convenient and can help you build credit, misusing them can get you in a great deal of financial trouble. It’s very easy to rack up credit card debt if you’re not using your card responsibly. It’s important to understand how credit cards work so you can avoid their common pitfalls. Remember that a credit card isn’t free money; it's essentially a loan with an extremely high interest rate. Therefore, you should only use your credit card for purchases you can truly afford. By paying your credit card balance in full each month, you can avoid costly interest charges and save yourself from a dangerous cycle of piling up debt.
4. Consider Working Part Time. If you find yourself on the wrong side of your budget, and you’ve already narrowed down your expenses to the essentials, it might be time to get a job – or a better job, if you already have one. Of course, your first priority should be to pass your classes so you can graduate, so you’ll want to ensure that your job won’t interfere with your ability to study and attend class. However, many college students are able to balance their studies with a part-time job and still find time to socialize.
5. Use Money from Student Loans Wisely. If you receive student loan or scholarship money, it’s vitally important to manage it wisely and responsibly. Your student loans should only be used to cover college costs like tuition and education related expenses such as books, a laptop, or housing. Never spend student loan money on personal, unrelated expenses like entertainment, vacations, or clothing.
6. Take Advantage of Student Discounts. Many businesses offer student discounts, and you should take advantage of them. Any money you can save will have a positive impact on your budget and financial health. Your school may provide a list of local businesses that offer discounts for students, and there are also online resources you can use to find student discounts such UniDays and Student Beans.
7. Save Money on Textbooks. If you are purchasing physical textbooks for your college courses, consider buying used books instead of brand-new ones. The cost savings can be significant, and many college bookstores have plenty of gently used books available. If your professors allow it, you might also consider buying digital versions of your textbooks instead of physical copies. E-textbooks are usually cheaper than traditional physical textbooks. If you do buy physical textbooks, you should plan to resell them once you finish your courses.
8. Utilize Your Meal Plan. One of the easiest ways to bust a carefully crafted budget is to overspend on conveniences like restaurants and fast food, especially if you are already paying for a meal plan at school. Try planning out your meals throughout the week and avoid the temptation to grab food from an outside establishment, which will surely eat into your budget.
College is a great time to lay the groundwork for financial success later in life. By paying attention to your finances and making smart choices with your money while you’re in school, you can increase your chances of graduating without a massive financial burden. For more budgeting and money management tips from BankFive, visit our blog.