4 Things Every College Student Should Know about Money Management

Check out this article for a list of things every college student should know about money management.

When you're in college, proper money management is a low priority. You focus on getting an education and preparing for the future, so it can be easy to lose track of your finances. However, this is the time you should establish healthy money habits that will last a lifetime. Check out this article for a list of things every college student should know about money management.

When I went away for college, living on my own for the first time felt overwhelming. Even though I was just sharing a dorm room with another student and I had a meal plan to rely on, there were still plenty of expenses to cover, so I needed to manage my monthly allowance carefully. My parents were kind enough to financially support me during my college years, but it's not like I had a trust fund to fall back on if things went sour. I needed to learn how to manage my cash, fast. Luckily for me, I figured out how important it is to save and budget from early on. Which isn't something I can say for most of my peers.

Take my roommate, for example. With a dangerous passion for designer handbags and partying excessively, I've seen her spend copious amounts of money recklessly without thinking about the consequences. She maxed out at least two credit cards our freshman year; and despite my efforts to explain how her current behavior will negatively impact her credit history, her lack of any basic financial knowledge eventually caught up with her. Now, two years after graduation, besides her student loans, she also has to pay down some massive credit card debt and she must find a way to rebuild her credit score – something that may take years to accomplish.

I don't consider myself a financial expert, far from it. However, I did manage to pick up a few important money management tips after I've left my parents' home. Here are five things every college student should know about how to take charge of their finances when they're on their own for the first time.

Recommended

1. You Should Open a Checking Account

If you don't have a checking account already, now is the time to open one. The bright side? Banks offer students plenty of perks. For instance, Workers Credit Union, my financial institution, requires no minimum balance, charges no monthly maintenance fee, and offers free online banking, mobile banking, and bill pay. Having a checking account is affordable, convenient, and safe. Plus, hopefully, it will help you get organized on matters of money and stay on track with your spending plan.

2. Budgeting Is a Must

I know budgeting sounds boring and time-consuming, but it's the only way to make sure you live well within your means. I never understood why my fellow colleagues thought that living on a budget meant never going out and never buying anything ever again. It simply means that you are aware of how much cash you have available and you make informed decisions on how it would be best to spend it.

Moreover, it's not as time-consuming and tedious as it may seem. You don't have to track every single dollar, but you should be able to approximate how much money you spend on everything from textbooks to drinks. There are several apps available to make you job easier. I started using Mint back in college, but you can try out different apps until you find one that truly suits your needs.

3. Credit Cards Are Dangerous

Constantly charging expenses on your credit card can lead to a monthly bill you're not able to pay. If you don't pay your balance in full every month, your debt will only grow over time, as you will also need to cover the interest. You're probably going to graduate with some student loans to pay off, so it's not wise to add extra payments from credit cards to your total debt. Buying a concert ticket or treating yourself to a fancy meal just isn't worth the amount of time it will take you to get rid of debt once it starts to accumulate.

On the other hand, building credit by using a credit card is a smart move, as long as you do it responsibly. Only charge small amounts of money on the card (like your Netflix subscription, for instance), and always pay the balance in full every month. This way, you establish credit without putting yourself at risk of overspending.

4. An Emergency Fund Can Be Life-Saving

Saving is always difficult; when you're in college, even more so. However, building an emergency fund is the best way to make sure you will have some money to resort to when the unexpected happens. Maybe you will have to pay a fee in a particular class, or maybe your car will break down suddenly. You never know what the future has in store.  

How to save? Abuse student discounts. Get a part-time job. Find free entertainment. For more ideas, take a look here.

Personally, I think every university should teach at least one class on money management. Until that happens though, students will need to get financial education elsewhere. The Internet is a great place to start, as there are plenty of free resources online you should take advantage of. The sooner you learn how to effectively manage your money, the better off you will be in the long run. 

GET SOME POSITIVITY IN YOUR INBOX

Subscribe to our newsletter and get the latest news and exclusive updates.