Financial Planning for College Students
Before college, most of us receive significant financial support from our family or friends – rent-free housing, food, clothes, gas money, allowance, etc. Typically, when you move out and start college, financial help may begin to subside as you start to take more responsibility of your finances. It’s important to understand how this transition impacts your wallet so you can adapt your spending and saving habits. This is the perfect opportunity to begin building a strong financial foundation.
Learning to Budget
The best way to start building your financial foundation is to create a budget. A budget will help you prioritize your most important purchases and determine how much money you’ll have left over each month for everything else. You may not have prior experience with budgeting, so it’s okay start simple and grow from there.
First, you’ll want to list out all your mandatory monthly expenses – this can include rent, utilities, groceries, school supplies, textbooks, etc. Next, you’ll want to determine your monthly income – this can include paychecks from a part time job, financial aid checks, and any other regular income you receive. Subtract your mandatory expenses from your income and that’s how much money you have left over each month. This remaining amount can be spent on discretionary, or “nice-to-have” expenses, like new clothing, concert tickets or takeout.
For more help, check out our Five Easy Tips for Budgeting.
Sticking to It and Saving
If you’re like the majority of college students, you’re not going to have a bunch of left-over money each month; make sure you’re sticking to your budget so you can make your mandatory monthly payments on time. If you’re having a hard time staying within your determined budget each month, you may need to adjust your lifestyle. Review your spending habits and see if there’s something you can cut back on like eating out or shopping.
No matter how tempting, you shouldn’t spend all of your left-over cash each month. Instead, consider opening a savings account or even investing. Budgeting as a college student can be tough, but it’s important to start saving as early as you can. Even putting away $25 here or $100 there will make a big difference post-graduation. It may seem too early to think about this, but your college days will be gone in the blink of an eye and it’s important to be prepared for what’s next.
Money Saving Tips
- Use budgeting and money management apps, such as Mint or Nerd Wallet, to help you get a better grasp on your finances.
- Take advantage of all the different student discounts available. Don’t be shy – flash your student ID for discounts on electronics, streaming services, insurance, cell phone service, retail purchases and more!
- Consider buying used textbooks or renting your class materials instead.
- Cook at home as much as you can and limit how much you’re eating out – this cost adds up quickly.
- Pay all of your mandatory expenses on time to avoid late fees.
- It’s not a bad idea to get a credit card to start building your credit and cover emergency expenses, but be careful because bad credit can be incredibly difficult to recoup.
- Utilize public transportation or try biking and walking to get where you need to go.
- Consider living with roommates to save money on rent and utilities.
- Research your campus amenities – there are often discounted or free opportunities such as gym memberships, libraries, museums etc.