A Beginner’s Guide To Money Management In College

Here's a beginner's guide on money management

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Learning to manage your money is key to staying financially healthy. Mastering money management skills are even more important for college students. For the first time ever, you’re solely responsible for your time, your work, your meals, and – perhaps most importantly – your money management. At a time when you’re just starting to build your finances, you’re also dealing with student loans. After spending thousands of dollars towards the cost of college, you’ll have very little left to spend. And that little has to go a long way. The only way to stretch your limited funds is to learn how to manage your money.  

These 8 money management skills for students will help you get a better handle on your money. 

1. Plan a budget for managing your money

In a lot of ways, your college experience is a trial run for your life as an adult in the real world. What’s more grown-up than planning a budget? It’s not fun, but budgeting your money is one of the most practical financial things you can do. It will give you a clear picture of how much money is coming in, where your money is going, and where you could potentially cut back and save. 

Start by thinking of the most important payments you have to make. These are non-negotiable costs that you have to cover and include tuition, housing, and college costs. Create a spreadsheet and enter all of these expenses. Then figure out how much you’ll spend on meals, textbooks, gasoline, and other essential expenses.

With all expenses recorded on paper or a digital spreadsheet, you’ll be able to see at a glance how much extra cash you have on hand to spend on non-essential items. 

2. Be mindful of student loans

Student loans enable you to get a higher education, which will open doors to higher-paying jobs after you graduate. But it’s important to understand how student loans work so you don’t get buried in debt after graduation. 

Understand the difference between federal and private student loans as well as the difference between subsidized and unsubsidized federal student loans. Compare the terms and conditions, interest rates, and pros and cons of both. Create a spreadsheet with notes on the interest rate, repayment terms, and repayment dates for both types of loans. Understand the consequences of late payments. 

Most important of all, borrow only what you need and no more. 

3. Learn to cook at home

Food can be one of the biggest non-academic expenses for college students. Eating in the college café can be as expensive as getting takeaways regularly. To avoid endless nights of ramen noodles or eating dinner out of the vending machine (both sadly familiar to your lovely author), learning to cook real meals is an investment that will pay off in a major way. This is an aspect that often gets overlooked but it is among the best money management skills for college students.

Almost all dorms have a kitchen area with a stove. Making use of this space will help you save a lot of money. You don’t have to be Emeril, but learning to grill burgers or boil water for pasta can be a major help to your wallet. If cooking is something you’re just not inclined towards, stock up on microwaveable food or sandwich supplies so you don’t have to go to the dining hall or order out every single night. It’s hard to believe, but takeout Chinese every night can take its toll on both your stomach and your bank account.

One final note: make sure you consult your roommate (or other people that spend a lot of time in your room) and find out if they have allergies before you buy or make anything!

4. Earn while you learn

It can be challenging to balance a part-time job in college with your studies. But just because it’s difficult doesn’t mean it’s impossible. Lots of college students take up part-time jobs so they can earn while they learn. When it comes to money management skills for college students, earning an income is just as important as saving money.

You don’t have to work full time and you likely won’t be working your dream job at this time. But there are plenty of part-time jobs that you can take up to keep your bank account in the black. 

Most colleges offer work-study programs for those in financial need, and if not, there are always other opportunities. Look for coffee shops or cafés on campus or around town that are hiring staff. Check for openings at the campus library or dining hall. If you excel in a particular subject, offer tutoring services to other students. Take up freelance work using your skills, whether that’s writing, programming, photography, or graphic design.

5. Determine what’s essential and what’s not

Don’t rush to spend the money you earn on a lavish lifestyle. Instead, consider putting it toward paying off your student loans early so you graduate with less debt. Your future self will be glad you did.

Learn the difference between essential expenses and unessential expenses. Tuition, rent, food, school supplies, medical bills, toiletries, and transportation are all essential expenses. A new pair of sneakers to add to your growing collection isn’t. Pay attention to what you’re buying. Spend your hard-earned money only on things you absolutely need. Limiting your spending will help your bank balance grow. 

Even when buying essentials, make sure you’re not spending more money than you should, especially if it isn’t worth it. For example, compare textbook prices from different sites (especially looking into used books) before you buy a new edition from the campus bookstore. Odds are that you’ll find a better deal online than you would on campus.

6. Don’t overlook student discounts

Many retailers, department stores, restaurants, theaters, and online stores such as Amazon offer generous student discounts. Ask around and explore the different local and online options available. Shortlist services that you’re likely to use the most. Taking advantage of available student discounts can help stretch your dollar much further. 

Rule of thumb when availing of student discounts – only buy what you really need. Saving money on something you don’t really need is still a waste of your limited resources. 

7. Avoid credit card debt

Credit cards have the highest interest rates, making credit debt the most expensive type of debt.  Unfortunately, it’s very easy to accumulate credit card debt by using it to spend more than you can afford to pay back. Failure to pay the outstanding in full by the due date can result in late payment fees and high-interest accumulation, leading to credit card debt. 

Learning to use a credit card smartly is a crucial money management skill for students. As a rule, only use your credit card to buy what you can afford to pay back and pay all dues in full each month. If you can’t resist whipping out your credit card for impulse purchases, it’s better not to get one at all. Use cash for all purchases. That way, you can never spend what you don’t have. 

8. Use spare cash wisely

You’ve been managing your money carefully by budgeting, saving, and earning an income. Your money management skills are now paying off and you find you have some money left over every month. Now is not the time to blow up that money uselessly. 

The best way to use that spare cash is by starting to pay off your student loans early. Putting even small amounts towards prepaying student loans can help lower the total amount of interest that accrues. Just this one action will help significantly lower the amount of student loan debt that you’ll need to pay back after graduation. 

Use College Raptor to discover personalized college matches, cost estimates, acceptance odds, and potential financial aid for schools around the US—for FREE!

 

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