The transition from high school to college is a big one. The thought of leaving home and being on your own for probably the first time is exciting, but with independence comes big responsibilities especially when it comes to making financial decisions. If you haven’t handled money independently before, it’s time to learn the basics of money management. We’ve put together a few basic tips for budgeting and saving money that students should know before starting college.
5 Budgeting Tips for College Students
1. Create a College Budget Plan
- Your total starting-out funds: Add up all the cash you have right now from all sources – gifts from parents and relatives, scholarships, income you’ve earned, grants, and student loans.
- Estimated upfront expenses: Write down all the unavoidable upfront expenses such as tuition, textbooks, fees, living expenses, and transportation.
Once you’ve got your income and upfront expenses accounted for, you’ll have a better idea of how much cash you’ll have left over to work with.
Some things to consider at this stage: Where will your monthly income be coming from? To what extent will your parents be supporting you financially and for how long? Depending on your answers, you’ll have to figure out how you’re going to make up for the deficit and create a solid budget from there.
2. Open A Checking Account
Depositing any free cash into a checking account in a bank is safer than keeping it in your room. It also helps curb the urge to spend impulsively.
A checking account offers you the dual benefit of allowing you to access your money easily for daily transactional needs while keeping your money safe. You can use a check or debit card to pay bills or make purchases. It’s important to remember that a debit card is not the same as a credit card. When using a debit card, you can only spend as much as you have in your checking account.
Research different banks to find the best option for you. Find out their features and benefits, terms and conditions, and fees if any. Also, check if the bank charges fees for low account balances. Starting your search for a bank now will give you sufficient time to find one that best suits your needs.
3. Understand How Venmo Works
Venmo has become hugely popular among the younger generation because of the social aspect built into the app. This is essentially an app that allows users to send and receive money to and from family, friends, and acquaintances. Along with sending money, users can also send messages and emojis or even chat with each other. This has contributed to its growing popularity.
There are a few pros and cons of using Venmo that you should be aware of before using this app. While it is quick, easy and free to make and send payments and messages, you should know that all transactions are public by default. That means any Venmo user can read your transactions and messages if they want to. They cannot view the amount sent but they can read all your messages.
Another consideration of using Venmo is the potential for getting scammed. If a hacker gains access to your Venmo account, they can easily swap your bank account for their own and transfer the money in your Venmo account to their bank. So in summary, use Venmo, but be safe and smart about it.
4. Get A Credit Card And Use It Wisely
Should college students use credit cards? That’s been a topic of discussion for a while now. The fact is there are benefits to using a credit card as a student but there can be downsides too. Understanding the basics of credit cards will help you decide whether or not you should get one.
Here’s what you should know about getting a credit card and how to use it wisely.
Generally, you can apply for a credit card after you turn 18. Or, you can get added to a parent’s credit card as a secondary holder if they allow it.
The biggest benefit of getting a credit card in college is that it gives you the opportunity to build your credit score slowly and steadily when you make your payments in full and on time.
Another benefit of getting a credit card in college is that it allows you to buy essential items, such as a new laptop if yours has crashed, even when you’re running short of cash. The reward points or cashback that you earn on your credit card spends are another advantage of using a credit card. However, it’s important to pay off your credit card balance in full each month to avoid interest charges.
The downside of having a credit card tends to be the temptation to spend on impulse purchases. This can lead to credit card debt which can damage your credit score even before you get started. Late payments will damage your score, doing more harm than good. Besides, the late fee penalties and interest on the outstanding can push you further into debt.
Is getting a credit card in college the right option for you? If you’re a responsible user, have a steady income the ability to pay off your credit card balance each month, then it could be an option to consider. However, if you tend to give in to impulse purchases or don’t have the ability to pay off your monthly credit card balance, it may be best to wait to get a credit card.
5. Start Looking Around For Used Text Books
College textbooks are expensive. In fact, they are the second-highest expense associated with college but you can shave off some of that cost by buying used textbooks. You don’t need new.
Most schools send out the list of textbooks you’ll need before the semester starts. If you haven’t received this list, call your school and ask for it. Join your college Facebook group and ask if anyone is selling the textbooks you need.
If you can’t find used textbooks that you need, another option is to browse through online book retailers such as Amazon. You’ll find their prices are significantly lower than campus prices. Also, find out if you can buy them in an e-book format. Virtual textbooks are much cheaper than physical textbooks.
Once college starts, you will be responsible for how much you spend and how much you save. But you don’t have to wait until the semester begins to get financially savvy. Learning the basics of money management and following these simple budgeting tips now can help college students get started on a solid footing.
Are you looking for student loans to help fund the gap? Use College Raptor’s free Student Loan Finder to compare lenders and interest rates side by side!