Heading off to college can be exciting, but it also comes with a lot of responsibility. Along with managing your classes and working to get good grades, you’re going to have to manage your money too.
For most students, college is their first experience with money management. Unfortunately, many students fail in this responsibility, and it can result in serious financial trouble. Here are some practical tips that can help college students as they learn how to handle their own finances.
1. Make a budget
This isn’t only the most basic step in managing personal finances—it’s also the most important. Start by listing all your income and monthly expenses. If there’s ever a case where you’re unsure about a source of income or an expense, always err on the side of caution. If it’s an expense, overestimate; if it’s income, underestimate.
Related: How to Make a Budget in College
2. Use technology
The initial budget you make will probably need to be adjusted once you put it to the test of the real world. For this reason, you’re going to want to track your expenses, keep records, and adjust your budget accordingly. Paper records can be difficult to maintain, and you’re unlikely to carry a notepad to record every little expense. Fortunately, today’s college students can download a variety of different personal finance apps that make the process easier.
3. Avoid credit cards
College students make an attractive target for credit card companies. As a group, they’re more likely to make unwise spending decisions, and they have a tendency to pay the monthly minimum and commit violations that result in fees. If you’re going to get a credit card, only use it when you really need to, and when you do use it, pay off the balance as quickly as possible.
4. Smart banking
Every college student needs a bank account, but there are significant differences in the types of accounts available. Don’t just sign up for an account at the closest bank; go to different banks and compare your options. You should also ask about student banking options. Most banks offer student accounts that have features designed to help students manage their money better.
5. Save on textbooks
Textbooks can be a real budget breaker, but there are ways to lower the cost. With many of the books on your list, you might be able to get away with borrowing them from the library. You could also buy second-hand copies of some books, and you should sell your old books when your class is over.
Technology also offers some solutions for saving on your textbooks. You might be able to download a PDF copy of some textbooks, or you could go to library and scan a physical copy. Once you have an electronic copy, you could then use the textbook with a tablet, e-reader, or your phone.
6. Find student discounts
As a college student, you’re eligible for all sorts of discounts. Local businesses and organizations know that most college students are strapped for cash, so they offer discounts to attract business and help students out. If you know where to find them, you can get discounts on food, coffee, transportation, entertainment, and more.
7. Define necessary spending
Most young people develop poor spending habits because they never take the time to differentiate between what’s necessary and what’s not. If they want something, they spend. If you’re going to maintain a budget, you have to take the time to sort the necessary from the unnecessary. This isn’t to say you can never spend on something that’s unnecessary—you just need to set reasonable limits for this type of spending.
8. Establish an emergency fund
For many adults, college student or otherwise, financial trouble comes as the result of an emergency. Maybe your car broke down or you got sick—it could be anything. When emergency expenses come up, you need to have money to cover them. If you don’t, you might find yourself borrowing money at a high interest rate, or it could trigger a domino effect that leads to more expenses, lost income, and mounting financial pressure.
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