6 Tips On How to Manage Your Money While In College

Freedom! Having been to college, I have to admit that’s the first thing I thought on my first day of school my freshman year. I was armed with a backpack full of books and a brand-spanking new Wells Fargo student credit card. I felt to independent and grown up. And every time my dad reminded me to watch my spending whenever we talked, I just scoffed at him like he was an overprotective nervous Nellie.

Until I got my first credit card statement!

My first quarter in college money slide through my fingers faster than a rain through a leaky roof. You never know how much you spend in one month until you see it all neatly added up on one ominous bill that includes a payment DUE DATE looming in the not-so-distant future. I quickly had to change my tune if I wanted to make it through multiple years of college. I learned a lot, the hard way, that first year about managing my money. So to help you avoid some of the most common personal accounting mistakes students make, here are six tips on managing your money while in school.

  1. Create a Budget
  2. Now that you’re in college funds are really limited. Attending class is your new job so it’s not like you can work extra hours to offset an impromptu spending spree. Therefore, you need a budget. Figure out how much you have coming in every month, how much you have going out, when bills are due, and then make a detailed plan that shows how you’re going to meet those financial obligations. If possible, set up automatic bill pay accounts (so you never have late payments, which incur late fees and interest that you can’t afford). And above all, always be looking ahead. You don’t want to be caught short at the end of the month.

  3. Don’t Live Beyond Your Means
  4. If you can’t afford to go out for dinner, then don’t—even if your friends pressure you to come with them. Don’t buy stuff you don’t need, which includes brand new schoolbooks when used ones, or the e-book versions would do just fine. Take public transportation instead of your car. In fact, if possible, get rid of you car all together. Even if your car is paid for, dumping it eliminates your car insurance, car maintenance, gas, and parking fees.

  5. Keep Only One Major Credit Card
  6. It’s so easy to just pay with a credit card without really thinking about the consequences down the line, so why not eliminate the temptation all together? The number one thing that puts students into debt during college is not tuition it’s credit card misuse. If possible, forego the credit card altogether and live on a cash basis. When making purchases online use a PayPal cash account or a preloaded, reloadable money card (one that won’t allow you to overspend). Walmart offers several affordable VISA money card options with no obligation or credit checks.

  7. Track Your Spending
  8. Balance your checking account (and if you have one, your credit card account) every month so you know where your money goes. The best way to do this is with banking software such as Quicken. It’s affordable, runs on both the Mac and PC platforms, and is easy to use. When you’re living on such a tight budget it’s vital to know how much money you have at all times.

  9. Join a Credit Union
  10. Traditionally, credit unions offer better checking account rates than most banks. Don’t be swayed by banks with claims of “first three months free checking” or some gimmick like that. Believe me, you’ll pay for it later when the charges for every transaction kick in. Credit unions typically offer free ATM cards, free checking with a low minimum balance, or free checking to students. Plus, when the time comes to get some sort of loan, credit unions offer their members better interest rates and more flexible payment schedules.

  11. Save
  12. Even if you’re living hand-to-mouth, you still need some sort of emergency fund (to cover, for example, unexpected medical bills, a car accident, airfare to go to a sick relative, etc.). Putting away as little as $5 a month adds up quickly and the first time you have to dip into your emergency fund you’ll be glad you have it. (And by the way, things like a girls’ night out or a trip to Vegas do not constitute emergencies. Don’t fool yourself into spending this money when you know you shouldn’t.)

Looking back on that first credit card statement I remember wondering who the heck was burning through all that cash? It couldn’t be me! I mean, who in their right mind would spend $8 on a gourmet hamburger? Credit cards bills have a way of adding extra stress on you that you don’t need while you’re in college. Best to just skip that step until after you graduate. After all, you have the rest of your life to get yourself into debt.

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One Comment

  1. Jill Orschel
    Posted May 6, 2011 at 3:22 pm | Permalink

    This brings me back to being a freshman in college and running waaaaaaaay over on my debit card. I haven’t used one since! Thanks for the great article, Stacy. I’ll pass along your tips to my kids.

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