For many, college is the first time being away from home. You are in charge of making independent decisions regarding how you spend your time, what you eat for dinner, when you do your laundry, how late you stay up, and most importantly—how you manage your money. In order to set yourself up for financial success in college and your future, it’s never too early (or late) to learn money management. We’ve put together seven important pieces of financial advice to help students manage money effectively in college.
Financial Advice for College Students
1. Learn How to Create a Budget
https://flic.kr/p/nNfV4o
Most college students are on a tight budget. The cost of tuition, fees, living, and accommodation leaves very little room for luxuries. If you’re not careful, you can run out of funds very quickly. Learning how to create a budget will give you a clear picture of how much money you own. Create a system that works for you, whether it’s the envelope system (dividing cash into envelopes for different spending categories) or using budgeting apps, as long as you can accurately track your expenses.
From this, you’ll be able to see how much money goes towards essential things like tuition, dorm living, textbooks, food, and gas. You’ll also be able to see how much you have left over. Choose wisely how you allocate your leftover money. You might want to save it for a future savings goal or use some of it for something that brings you joy, like dinner with friends or a hobby you enjoy. A well-planned budget is your best tool for financial stability throughout your college years.
2. Cut Down Costs Where You Can
It might be tempting to splurge on the latest trending item or a spontaneous night out, and without having anyone to account to, it’s easy to do so. But before you spend on an item, ask yourself if it’s really worth it. Do you have the spare cash to put towards this item or event? Could you put it to better use instead?
Don’t underestimate the power of saving a few dollars (even if it’s just from scaling back on buying a $5 coffee every day). It might not seem like much at first, but it can add up over time. When you cut back on costs, it allows you to put money towards bigger financial goals, such as buying a new car or paying off student loans early. Here are a few practical tips for saving money:
- Purchase used textbooks or rent them instead of buying new ones.
- Cook meals at home instead of eating out.
- Cancel subscription services that you don’t frequently use.
- Split costs with roommates or friends, such as sharing groceries or cooking meals together.
3. Learn How to Properly Use a Credit Card
Learning how to choose and use a credit card can offer benefits like cashback, discounts, and special offers—as long as they are used wisely. However, it is so important not to abuse your privileges, or you’ll find yourself deeper and deeper in debt. Credit cards can be particularly handy in emergency situations when you don’t have cash on hand, but if you spend more than what you have, it can lead to financial trouble. Keep this in mind when it comes to owning credit cards:
- There is a set limit on how much you can spend. While you can technically purchase anything within this limit, remember that it’s not free money. You are borrowing money that must be repaid.
- Always try to pay off the full amount by the due date, which is usually within 30 days of the purchase. If you don’t, you’ll start accruing interest on the outstanding balance, which can quickly add up.
- As a best practice, don’t use credit unless you’re 100% sure you have the money to cover it on the payment date.
4. Build Good Credit
A credit score is a number that predicts how likely you are to pay a loan back on time based on your credit reports. Having a good credit score doesn’t happen overnight, but can open many doors for you, making it easier to get a mortgage, credit card, or auto loan. What’s more, you’ll typically pay a lower interest rate if you have good credit.
Your college years are a great time to start building credit and it’s not too difficult. The most important thing to remember is to make sure you make all credit payments in full and on time.
Take time to learn how to build your credit score while you’re in college.
5. Student Loans: Only Borrow What You Need
Many students need to take out loans to help pay for college. Before you take out a loan, make sure you’ve exhausted all of your other financial aid options like grants and scholarships.
If you do still need that loan to fund the gap, borrow only what you’ll need. The primary goal is to support you so you can focus on school without overburdening your future self with unnecessary debt. Therefore, don’t be tempted to get a loan for more than you need—student loans are not free money!
Interest accrues while you’re in school, and repayments with interest often start six months after graduation. Only borrow the minimum amount you need to cover tuition, fees, and basic essentials, and avoid using your loan for anything else.
Before taking out a loan, make sure you understand the terms, including the interest rate, repayment schedule, and any associated fees.
6. Track Your Money Regularly
Make it a habit to keep up with your bank account and credit card statements regularly. This will help you see exactly how every dollar is being spent and make sure you don’t experience fraud. Maybe you notice that you’re spending too much on takeout every month, or you spot a charge for something you didn’t actually purchase. By consistently checking your statements, you’re helping yourself to be more financially aware of your expenses.
7. Find Ways for Extra Income
Many college students work a part-time job during college to help them become more financially independent. Whether it’s working at a coffee shop or doing freelance work for local businesses, a part-time job is a great way to make extra income, giving you more experience with budgeting, saving, and deciding what’s worth spending money on.
Establishing good financial habits even before you start college will hold you in good stead throughout your adult life. You’ll find lots more financial advice for college students here.
If you’re looking for ways to help pay for college, why not apply for free money*? Try using College Raptor’s FREE Scholarship Search tool to look through thousands of scholarships to apply for today!
*While a scholarship does not have to be repaid, there may be other obligations associated with the scholarship.
| Lender | Rates (APR) | Eligibility | |
|---|---|---|---|
 |
5.50%-16.12%* Variable
3.99%-15.61%* Fixed
|
Undergraduate and Graduate
|
VISIT CITIZENS |
 |
5.54% - 15.70% Variable
3.99% - 15.49% Fixed
|
Undergraduate and Graduate
|
VISIT SALLIE MAE |
 |
4.63% - 17.99% Variable
3.49% - 17.99% Fixed
|
Undergraduate and Graduate
|
VISIT CREDIBLE |
 |
6.00% - 13.75% Variable
3.99% - 13.75% Fixed
|
Undergraduate and Graduate
|
VISIT LENDKEY |
 |
5.66% - 14.72% Variable
3.69% - 14.56% Fixed
|
Undergraduate and Graduate
|
VISIT ASCENT |
|
|
3.70% - 8.75% Fixed
|
Undergraduate and Graduate
|
VISIT ISL |
 |
5.62% - 16.85% Variable
3.69% - 16.49% Fixed
|
Undergraduate and Graduate
|
VISIT EARNEST |
 |
5.00% - 14.22% Variable
3.69% - 14.22% Fixed
|
Undergraduate and Graduate
|
VISIT ELFI |
