This fall, many young students will be moving away from home and beginning their exciting college journey. Going to college is one of the most challenging and exciting experiences of your life. It provides you with a wealth of knowledge, however, it can also take a toll on your finances if you are not careful.
Colleges are one of the first instances that a student is in charge of their own finances. This gives them more freedom to decide how and when to spend their money. However, the cost of tuition, books, class materials, and other necessary expenses can quickly pile up each semester leaving you with a ton of student debt that has to be paid back after graduation.
Today, the average American student leaves college with more than $37,000 in debt, including student loans. According to data from the Federal Reserve, the total amount of student debt in the United States of America is $1.56 trillion.
These statistics prove that managing your finances wisely is important to stay in good financial shape in and after college. For many students, this fall will be the first time they are required to budget and manage their own money.
However, there is no reason for caution, In this blog, we will discuss the best personal finance tips for college students for when they leave home and start their independent life in college.
Top 18 Finance Tips for College Students
For every student, these simple finance tips for college students can pave the way for a lifetime of financial stability and wellness.
Create a Budget
First and foremost, the first order of business for every college student should be to formulate a budget as it is an integral part of your money management plan. In order to create a budget, firstly, write down the amount of money you have on hand, your monthly or weekly expenses, and the amount of income you generate on a regular basis. This will help you identify your expenses and the amount of disposable income you have each month. Whatever amount is left can be saved or left over for personal future expenses like vacations or simple outings.
Moreover, there are now various apps like Mint and Pocket Guard that can help you create and maintain a budget. As a student, you can’t expect to manage an entire semester’s syllabus without a proper schedule or calendar, the same is true for a budget which is just a written-down financial plan.
Adjust the Budget According to Your Needs
It is highly unlikely that you will create a foolproof budget on the first try. As a new college student, you will face a lot of financial firsts, which is why it is essential to learn how to properly save money and manage your expenses in your 20s. After you have created your first budget, take some time to ponder and determine if the first budget is practical according to your expenses( give it around six months).
Oftentimes, you will adjust your budget according to the fresh new expenses you will experience as a college student. Remember, sticking to a budget doesn’t mean you cut back on everything. If you’re still uncertain, you can consult adult family members who have priori budgeting experience.
Track Your Expenses
Once you have an ironclad budget in place, make sure to stick to it. This involves tracking your expenses to identify how and where you spend your money. Every college student has necessary expenses like food, clothing, transportation, and rent. You might also have other non-essential expenses such as subscriptions, restaurant bills, etc.
Make sure you have enough money to cover your necessary expenses before investing in your other expenses. Tracking your expenses will help you monitor your cash flow and will also motivate you to cut back on unnecessary spending.
Build an Emergency Fund
You can stick to your budget all you want but one major emergency can disrupt your finances. Emergencies can easily eat up your savings and land you in debt. This is why it is essential to build and maintain an emergency fund as emergencies are often unexpected. For instance, you might need to get your car fixed or an unexpected medical emergency.
Setting aside enough money for emergencies can help you tackle this problem without tapping into your savings. Make sure to set a percentage of your income or paycheck in a separate account for emergencies. Keeping it separate will also ensure that you will not accidentally spend it.
Search for Available Financial Help
One of the best basic finance tips for college students is to seek financial help. There are many opportunities specifically for students where they can seek financial aid for tuition or study materials. There are many scholarships and other types of financial aid for students. If you qualify for a particular scholarship, you only need to fill out an online application to avail it. If you can master how to manage money in your 20s, this particular skill will help you throughout your adult life.
Start Establishing a Credit History
Another popular finance tip for college students is to start building your credit history. This can be done by applying for a credit card. However, a credit card also comes with the risk of overspending. In order to avoid that, you can set up an auto-pay charge like streaming subscriptions and cut up the credit card. The card will continue to build your credit score without the temptation of spending incessantly. Establishing a credit history in your early 20s is one of the best financial advice for young adults.
Boost Your Credit Score
Once you have established a credit history, the next step is to boost your credit score and keep it in a healthy range. This shows creditors that you are financially responsible and can make it easy for you to get approved for loans and mortgages. The credit score also affects how much interest you pay on your loans.
You can easily boost your credit score by using a credit card responsibly, keeping your balances low, and paying off the full amount each month. If you have a low credit score, you can also increase it by paying your bills and debts on time.
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Keep Credit Card Debt to a Minimum
It is essential to not treat a credit card like an infinite source of money. High credit balances and missed payments can be detrimental to your credit score and disrupt your financial stability. Moreover, poor credit scores can also negatively impact job searches, apartment rentals, and housing purchases. If you are about to sign up for a credit card, make sure to keep these factors in mind-
- Start with a prepaid card to get into the habit of budgeting. You can pre-pay the card from your paychecks and money from your family. Keep another credit card to take care of emergencies.
- Research before you apply for a card. Take a look at the spending limits, interest rates, and terms and conditions to make an informed choice. Nowadays, there are plenty of credit cards specifically for college students.
- Monitor your spending and buy only what you can afford. Paying off your card in full each month also boosts your credit score.
Take Advantage of Student Discounts
One useful finance tip for college students is to be on the lookout and take advantage of student discounts. Student discounts can help you save a lot of money on a variety of expenses. Many major companies offer student discounts on various products and services including car insurance, gadgets, streaming subscriptions, and more. You can also check with local businesses to see if they offer any discounts to students.
Taking advantage of these discounts specifically for college students can help you save a lot of money on overall products and services. Also, make sure to avail these discounts at local attractions like theme parks and museums. You might even be able to stay within your budget and save more money than you hoped for by taking advantage of student discounts.
Treat Student Loans as a Last Resort
One of the first things your college informs you about is student loans. That’s how they mint money. But the predatory US student loan system is nothing short of an epidemic, with an average of $1.7 trillion in student loan debt worldwide, which is way higher than credit card debt.
Before you tap into your student loans, max out your scholarships, grants, and other available options. If by chance you can’t afford a college without student loan, you should reconsider your college options. One of the best ways to save money is to transfer credits from a community college.
Create a Regular Source of Income
While you are studying in college, you should also get a part-time job or a side hustle to generate regular income. Working a part-time job will provide you with a source of steady income which is essential for college students who are looking to manage their finances. You can use this income t pay off your credit cards or save additional money.
Having a part-time job will also serve as valuable experience for when you step into the working world. Moreover, you can also acquire skills that may come in handy when you get placed. However, make sure you are able to keep up with your college tasks and work at your job without burning out.
Avoid ATM Fees and Other Bank Fees
One of the best finance tips for college students is to save money by avoiding bank junk fees like ATM charges. By steering clear of unnecessary ATM fees, you can save more than you think. If you have to use an ATM, make sure to withdraw a large amount so you don’t have to pay the fee again. Remember, little things add up and in the coming years you will understand the value of this simple financial tip for college students.
Eat at Home On a Budget
Dining out, eating street food, or using food delivery services may seem convenient for a busy college student but these are small expenses that eventually add up. Doing so frequently can eat a huge chunk of your budget. Instead of relying on restaurants and food delivery services, do a little meal planning and eat at home to cut these unnecessary costs.
Planning your meals ahead of time can also help you budget for groceries. Moreover, purchasing groceries and cooking at home can be significantly cheaper than dining out. You can also prepare and freeze meals at the start of each week to save the hassle of cooking every day.
Buy Used Textbooks Whenever Possible
Students who are interested in saving money as college students will find that buying used is one of the best ways to save some extra cash. Buying brand-new items and stationery is always going to be more expensive than purchasing secondhand or used items. For instance, you can easily find used textbooks for colleges online or at a college bookstore that costs a fraction of the amount of a brand-new one.
Moreover, when it comes to larger purchases such as furniture or vehicles, you can also find some pretty good options by exploring a bit. You can save a ton of extra cash by opting for secondhand and used items. The money saved from these purchases can be added to your emergency fund or savings account.
Automate Bill Payments and Transfers
Being late on your bill payments can lead to late fees and higher interest rates. Not to mention, it negatively impacts your credit score. Most college students also often forget to transfer money from their checking to their savings account due to the busy schedule of classes and tons of schoolwork.
Late payments can be easily avoided by automating your bill payments and transfers. This will ensure that your bills are never late and you can also transfer money from your savings account to your emergency fund on a regular basis. Setting up automated payments gives you one less thing to worry about so you can focus completely on your studies and tests.
Use Campus Facilities like Gyms
Most college campuses offer student discounts or free access to gyms, training centers, and athletic facilities. Taking full advantage of your campus facilities is one of the best basic financial tips for college students that can help save a lot of money.
It allows the students to access a gymnasium without incurring the monthly expense of a gym membership which is getting costlier day-by-day. Some college campuses even offer discounts to the family and relatives of the students too.
Become a Notary Public
One of the lesser-known finance tips for college students to save money is to become a notary public. Each state has its own rules and regulations to qualify to become a notary public. These qualifications generally include being at least 18 years old, having no record of criminal behavior, and being a legal resident of the state in which you practice.
While some states require prior training and most require an exam to become a notary public, it is still one of the best financial tips for students in their 20s, especially for those who wish to give back to their community.
Review Regularly and Adjust Your Budget
Setting up a budget and monitoring your expenses is a good way to manage your finances. However, you must also review your finances regularly(weekly or monthly) to determine if you require any adjustments to your budget, such as spending less on non-essential or saving more. With regular audits and adjustments, you can expect to be financially stable and look forward to a brighter future.
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In conclusion, budgeting and saving money are essential for college students who hope to be financially stable by the end of college. You can use the finance tips for college students listed in this blog to manage your finances and keep track of your expenses. Moreover, make sure to build up an emergency fund and maintain a healthy credit score as it will come in handy when you graduate. Lastly, regularly monitor your expenses and review your budget monthly or weekly to determine whether you require any adjustments. Remember, caution is the key to financial stability.
Frequently Asked Questions(FAQs)
Ans. The 50-30-20 rule suggests that you should only spend 50% of your after-tax income on necessities and obligations. The rest must be divided between 20% on savings and debt repayments and 30% on anything else that you may want to purchase or want.
Ans. There are plenty of simple finance tips for college students that can help them save a lot of money and set them on the path to financial wellness. In this blog, we have listed the best finance tips for young adults in their 20s.
Ans. Some key factors to remember to become financially stable while studying include saving, avoiding loans and debts, tracking your spending, and monitoring your expenses.