Managing Money Hit the Books, Not Your Wallet

by Kali Roberge February 01, 2019

You put a ton of thought into your dorm room decor — good call on the signed band poster! — but how is your financial setup looking?

For many, freshman year of college is the first time they step out of their family’s house and into the world of handling finances and bills on their own. While it may feel a little intimidating, you can learn to manage your money and get on top of your finances so you can focus on college life.

To get your financial footing, you'll need to learn how to manage your cash flow and expenses, plus longer term financial goals. Use this three-step process for making good money moves.

Step one: Get to know your money with a budget
 

You can’t manage what you don’t measure. Write down what you buy — it will help in evaluating whether a purchase is a need or a want. For example, school supplies and transportation costs may be “musts” while restaurant meals and other forms of entertainment are “wants.” And if you’re the rare student whose income exceeds what you’ll have to spend for needs and wants, consider establishing a savings account for that proverbial rainy day.

Budgeting is a learning process that takes practice. If you’re unsure on how much to spend on a well-deserved night out, refer to your list, evaluate potential upcoming expenses, and figure out if you actually have cash available to use. Helpful software and banking apps allow you to connect bank accounts and credit cards, and then they track all the activity that happens with each account. Use these resources to help build your budget, track spending and visualize your progress.

Some digital tools can even automate some important parts of your budgeting like depositing checks you might receive from a part-time job or your parents. You could also set up automatic billing to take care of payments for things like your cell phone or gym membership.

Apps may even benefit your budget by making it feel less awkward to ask for money. “Just 27% of people say they’re willing to ask a friend to pay them back for purchases under $10,” says Ravi Loganathan, head of digital and strategy at Zelle, an app for transferring money online, who shared the research from Zelle. “But if you’re a college student, every penny counts — even if you’re just splitting the cheapest pizza possible with your roommate.”

Where should your “goals” money go? Consider opening a savings account. “By opening a savings account, you can put away some money and you won't be tempted to spend it,” says Jake Lunduski, who graduated from college in 2016. “The money you saved up can be used to put toward your loans right after graduation.”

Dan Tash, a 2017 grad, suggests that students open several different savings accounts and label them. The names of the account should match what the money in them is for: Emergency Fund, for example.

“Set up automatic withdrawals from your checking to your savings accounts. Schedule that to happen on the same day as you get your paycheck if you're working while in school,” says Tash. “You'll be saving automatically without thinking about it.”
 

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By opening a savings account, you can put away some money and you won't be tempted to spend it.
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Step two: Spend less, save more

 

Sticking to your budget will be easier if you can reduce your expenses and defray the costs of college. Here are some easy ways you can spend less without spoiling your fun:

Rent your textbooks. Instead of buying new textbooks every semester, see if you can buy or rent them used. Check with your college bookstore or search for titles online. And tap into your networks — ask friends and classmates who already took the class if they have a used copy of the textbook you can use or buy at a discount.

Ditch your car. “Evaluate if you really need your car on campus,” advises a current college senior, pointing out that some schools have astronomical on-campus parking fees. “If you can walk or use public transportation, you might not need a car. And you can always befriend someone at school that does have one.”

Be careful with loans and financial aid. Many students access financial aid to pay for school, but you should only borrow what you actually need to cover your college expenses. “If you borrow too much, you're not going to get a ‘return on investment’ from your education,” says Robert Farrington, a personal finance expert who provides resources for college students via his website, the College Investor.

How much is too much? Your post-college plans should play into that decision, since you'll need to be able to afford to repay what you borrowed during school. “Don’t borrow more than you expect to earn in your first year after graduation,” Farrington suggests. An aspiring teacher who expects to earn about $40,000, for example, may consider taking out no more than $40,000 worth of student loans.

Apply for scholarships. Did you know most scholarships are open to all students — not just incoming freshman? “You can apply and get scholarships every year you're in school,” says Farrington. He suggests using scholarship search tools available online to look for funding.

You can turn to your local community, too. “Look for scholarship programs hosted by organizations, companies, and more. These local opportunities typically have less competition, so you have a better chance of getting money for college,” he suggests.

Pick up a part-time paid internship or an on-campus job. What if you don’t have enough money left at the end of each month to contribute to savings — even though you’ve tried your best to spend less? You may want to consider how you can earn more. “On-campus jobs are usually a good bet for students,” says Lunduski, “because managers and supervisors are more likely to understand and work with you to help you learn to manage your dual responsibilities.”

Gig between semesters. If you already have a full-time course load, taking on additional work might not be an option while classes are in session. But taking on side gigs between semesters may be an alternative. That’s exactly what Miranda Warner does. The 21-year-old junior uses a service called Rover that connects dog owners and dog walkers. When Warner is at home in Seattle during college breaks, she tries to walk as many dogs as she can to earn extra cash.
 

Step three: Take your college financial planning to the next level
 

You don’t have to wait until you graduate to start addressing some other money matters — make these advanced money moves now and get ahead of the game.

Figure out student loans. Get a basic understanding of how student loan repayment plans work at StudentLoans.gov. And if you can, start paying the interest on your loans before you graduate. Doing so will help keep the cost of your debt down.

Give yourself some credit. Now could be the time to look into applying for a credit card, the use of which can help establish your credit history. “Building a solid credit foundation is essential for everyone,” says Farrington. Why? Because your credit score may influence things like interest rates on loans and other financing you may need at some point in the future, as well as nearer-term needs like renting an apartment.

Consider applying for a no-fee credit card and use it for essential purchases (like your gas or groceries). Then, pay off your charges on time and in full. You can use your banking apps to help you make those payments on time and avoid late fees (and late payments, which can damage your credit score). As you work to build your credit history and score, sticking to one card might be a smart idea until you build good credit management habits.

Ask questions. It’s never too early to learn more about money — but you may need to get proactive about increasing your knowledge. Do your research, read financial blogs, tune into money-oriented podcasts or check out money management books from your college library.

Navigating your personal finances as a college freshman might be yet another thing to add to a long list of first-time experiences this year, but with a little planning, you'll ace it — just like your classes.
 

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Do your research, read financial blogs, tune into money-oriented podcasts or check out money management books from your college library.
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Boston-based writer Kali Roberge covers finance, travel and business on her blog GoingBeyondWealth.com.

 

 

The content reflects the view of the author of the article and does not necessarily reflect the views of Citi or its employees, and we do not guarantee the accuracy or completeness of the information presented in the article.