Now that you’re in college, it’s likely that you are in charge of your own financial affairs more so than when you lived at home and functioned mostly as part of your parents’ economic universe. Certainly, you have more freedom to decide where and how to spend money, especially if Mom and Dad are many miles away.
But along with that freedom comes the responsibility to spend money wisely. That’s what it’s like when you’re on your own — you get to decide. And you also get to experience the consequences of your choices, both good and bad.
Here are some tips to help keep you in good financial shape as you embark upon your college career:
1. Take control, and be responsible.
Unfortunately, it’s way too easy to neglect your finances when there are so many other challenges to meet and adjustments to make regarding college life. But you simply cannot begin your adulthood with bad money habits, and college is an excellent place for you to decide to take charge of your personal economy and be responsible with your money.
Even if your parents continue to pay some of your bills — tuition, and room and board, for example — you should work out a plan with them for shifting your other expenses to your control. You need to have a solid, well-thought-out financial strategy in place from Day One — with you at the helm.
2. Create a budget
This is essential. You need to determine the amount of money flowing your way from all sources: parents and relatives, financial aid and scholarships, student loans, and any income from your own employment. Then you have to estimate your expenses: books, bills, toiletries, entertainment, etc. Put all of the categories and numbers into a spreadsheet, and try to make everything balance, with a little left over for emergencies, and if possible, savings. There are online tools to help you with this step.
Now you have to commit to sticking to your budget. Straying from your financial blueprint defeats its purpose and risks pushing you into debt. So when you feel the urge to spend impulsively, particularly on something that you don’t really need, go back and check the budget. Let it be your guide and master. Don’t jeopardize your college career by creating a hole you can’t dig out of.
3. Get organized.
Set up your financial structure. Open a bank account or join a credit union, so that you can write and cash checks, use a debit card, have access to an ATM, make deposits and start a savings account. Shop around for the best deal, and compare fees. Banks are constantly creating new charges for services that were once free. Ask questions and get answers about overdraft protection, online banking, minimum balances, etc.
Many colleges have their own systems for paying for campus events and cafeteria food. Determine the best and most convenient way to set up and fund your various accounts, both on campus and off. Make sure that you have a dependable method that works for you and allows you access to your money at all times.
4. Keep track.
Create a routine for yourself that includes a regular accounting of your finances. By keeping careful records of what you’ve paid out and what you have left in your account(s) to cover the remainder of your monthly expenses, you’ll soon have a very clear picture of your financial situation.
This financial self-knowledge is key to keeping yourself on track. It’s not that you have to know every detail down to the last penny, but having a good idea of when you can hit the ATM for a few spare bucks, and when you have to rein in your appetite for an expensive meal off-campus, will make your life calmer and allow you to worry about more important matters — like your grades.
5. Use credit wisely.
If you haven’t made the acquaintance of a credit card till now, or you’re not lucky enough to have a card from Mom and Dad with a generous spending limit, this may be a good time to start understanding the benefits and responsibilities of credit. First, remember that a credit card is a loan, not free money. That means that any balance you run up has to be repaid. If you don’t pay your bill in full and on time, you will accrue interest charges and late fees, in addition to the principal. And before you know it, you could be dealing with collection agencies. So don’t be sloppy with the use of credit cards or the paying of bills. The costs can mount quickly.
Shop around for the best deal by comparing interest rates, and don’t be too hasty when signing on the dotted line. Low introductory rates that climb precipitously in a matter of months are often proffered by lenders in order to lure in the uneducated borrower, so read the fine print.
Start with an account that has a low limit and use it sparingly at first, remembering to pay it off in full every month. This way, you are establishing a solid credit history that will continue throughout college and beyond, and can benefit you when you go looking for a new car or your first house.
6. Get a job.
Yes, college is a lot of work. You’ve got a full load of courses, term papers to write and lots of studying to do. And of course you also deserve free time to socialize and indulge in extracurricular activities. But the money you can earn from working part time while you are in school can actually supply a great portion, if not all, of your discretionary funds. Besides, there is nothing that compares with the self-esteem you will garner by earning your own money.
Most colleges have work-study programs that allow you to create a work schedule around your schooling. The pay is usually not that great, but then again, neither is the labor generally all that hard. You may wind up dialing for dollars for the alumni fund, stacking books in the library, or manning your dorm office for a few hours at night and on weekends.
Look off-campus for restaurant or retail jobs with part-time hours. If you work summers, make sure that you put some of that income away for use during the school year. You might as well get used to working and saving. You’ll be doing it for the rest of your life.
7. Don’t buy new.
There is not a need to purchase a new textbook, if you can find a used one for a much reduced price. If you have to buy new, remember that campus prices are almost always higher than online retailers like Amazon. These days, you may also be able to order e-books for an e-reader or laptop and pocket the difference between the virtual and actual text.
Also, remember that if you’re moving into a dorm room, someone else is moving out. Maybe you can get a used refrigerator or coffee pot from someone on campus. Recycling helps the environment and saves money.
If you live off-campus, forget about buying the latest designer furniture from Sweden. There are secondhand stores that can furnish your student apartment just as easily. And you’d be surprised at the great stuff that you can get at a yard sale. The point is, this is the time of life to ratchet down your sophisticated tastes and go for the simple and inexpensive.
8. Protect yourself.
Be particular when it comes to your money. Don’t leave cash lying around. Be skeptical of classmates, friends or others who want to borrow money, or have great ideas about how you should spend yours. Be careful about identity theft, especially if you shop or bank online. Think about forwarding financial mail to your parents’ home.
Expect the unexpected by keeping a stash of cash in a safe place for emergencies. And don’t get caught having to pay fees on overdue library books, parking tickets and the like.
9. Look for ways to spend less.
Take advantage of any student discounts from local businesses. Check online for student deals on travel, food, books, clothing, entertainment, etc. Clip coupons before a shopping trip, and buy generic whenever possible. Don’t spend extra money on food — especially fast food — if you have a meal plan. Wait for the next blockbuster to go to DVD and borrow it from the library. Sooner or later, all movies are free. Don’t overspend on your phone plan — use Skype to call home.
10. Entertain on a budget.
There are lots of ways to have a good time in college without breaking the bank. In fact, many college activities are free to students because a general student activity fee has probably already been folded into your tuition payment.
Set limits on your spending for nights out and dates, and don’t be intimidated into believing that you have to prove anything by the amount of money you shower on your friends. There’s nothing wrong with having fun, but remember why you’re in college. Excessive partying can lower your GPA and your bank account.
The good money habits you begin to practice in college will serve you well during your years there and well into your post-graduate life. Make learning how to use money intelligently a part of your college education.
Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it seven years ago, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering college and professional sports, which are the fantasy worlds of finance. His work has been published by the Associated Press, New York Times, Washington Post, Chicago Tribune, Sports Illustrated and Sporting News, among others. His interest in sports has waned some, but his interest in never reaching for his wallet is as passionate as ever. Bill can be reached at email@example.com.