Tips for Successfully Managing Your Money in College
Your college education is an investment in your future self, but you don't have to break the bank to get the most out of the next four years as a college student. Even before you've settled into college life, it's important to get a handle on where your money is coming from and where it is going. Sure, you worked that summer job and have some cash saved up from graduation, but how long will it last? Taking the time to learn your finances can help you make money decisions that will put you on the path to achieving your goals.
Know your debt. With the rising cost of college education more students are finding it necessary to take out loans to help them reach their academic and career aspirations. There are many types of educational loans available to students, however, the loan amounts, interest rates and terms vary. If you determine the need to take out loans, only take out what you need. If you accept $7,500 in loans each academic year, you want to be sure that you have complete understanding of what repayment will look like upon graduation when that total amount exceeds $30,000 once interest accrues.
Budget. It's important to know the source of your income as well as your expenses. It's likely that your income is coming from several places: monetary gifts, loans, scholarships, savings, and work are the most common. Once, tuition, room/board, and books are paid for you'll need to manage the rest of your financial resources and spend responsibly and budgeting can help you do that. Let's say you have $400 saved in your checking account for expenses during your first semester (September - December). With $100/month budgeting can help you prioritize some of those resources for gas money to go home, a night out with friends, or that new hoodie you saw in the bookstore.
Think critically about your wants vs. your needs. When it comes to spending, you get to make the financial choices. The newest cell phone, may not be the best place to put your limited funds and impulse buys may cause you to overspend. By budgeting and tracking your expenses, you can decide where your money is put to use according to your values and financial goals which will allow you to live within your means. Consider creative ways to reduce expenses, take advantage of free or reduced cost campus events, limit your trips off campus, and brainstorm your next side hustle instead.
Create an Emergency Fund. Life happens, and sometimes what happens can have costly consequences. You want to be prepared for the unexpected as best you can. This means saving some of your money in an emergency fund. It's better to have it and not need it, then need it and not have it. You don't know when that flat tire or root canal may happen, and when it does, you don't want it to wreak havoc on your budget.
College is a time of transition and new-found independence. Taking charge of your finances early and establishing wise financial habits can ensure that you meet your short-term and long-term goals.