Many young people are first exposed to managing their finances during college. College is often as much about learning how to function independently in the world as it is about academic learning.
Some students will do well, while others will struggle to manage expenses, but anyone can thrive financially. Financial literacy is something anyone can learn!
The cost of tuition is high and rises every year, but housing, books, and living expenses add up as well. According to the College Board, these costs can be as high as $30,560 per year in addition to tuition and fees.
Here are seven moves that you can make to ensure expenses don’t leave you with post-grad financial regrets:
In This Article
1. Set a budget (and stick to it)
Establishing and sticking to a budget is a good practice to start early and maintain throughout your life. It’s especially important in college when it’s often a struggle to make ends meet. Let’s face it, running out of money is about as fun as an 8 AM class on Friday.
A budget doesn’t have to be complicated and doesn’t have to take a long time to accomplish. Some people use mobile apps, others use web-based budget calculators or even paper notebooks. The important thing is finding a system that works for you and sticking with it.
2. Open a savings account
Start building your savings by opening an account with no fees or a low minimum balance, such as a high-yield savings account, and deposit money in it every time you get paid.
Include savings as an expense in your budget, so you remember to do so. The last thing you need is to run out of money during finals week and have no savings to get you over the hump.
3. Get a side hustle
Finding time for a part-time job can be tricky, but gig work can give you the flexibility to work around your classes and other obligations.
Companies like Lyft, Uber, Instacart and other specialized gig platforms are often perfect for busy college students. Many students do freelance work or tutoring. Some students even make commissions for art or sell things on Etsy.
4. Be smart with credit
Establishing a credit history in college can open many doors for young people later on. There are several options to do so.
- College credit cards: Many credit card companies offer credit cards for college students, and they often market these to students on campus. They often have low credit limits and carry high interest rates in comparison to other cards.
- Secured credit cards: These credit cards require that the cardholder pay a deposit, and your credit limit is generally equal to the amount of that deposit. These cards help build credit for those who can afford that upfront cost.
- Authorized user: If you have a parent or older sibling with credit cards and good credit, ask if you can become an authorized user on their card. This helps you build a credit history! However, if they don’t maintain a good credit history this can also affect your own, so we recommend being cautious with this approach.
If you decide to open a credit card, only spend what you can pay back and pay the balance in full and on-time every month. This avoids accumulating high-interest credit card debt while establishing a strong payment history to boost your credit score.
Emergencies and unforeseen expenses happen, so if you accumulate credit card debt, don’t panic! There are ways to manage your debt, including the possibility of paying it off with a personal loan through Prosper*.
5. Pay bills on time
College can be a blur, but it’s important to keep track of bill due dates — and Sallie Mae estimates that nearly a quarter of college students don’t pay bills on time. Heading off to school is when most students begin paying their own bills and start establishing their credit.
Whatever bills you may have, it’s critical to make timely payments, since negative marks on your credit report have serious consequences long after graduation. Fortunately, you can easily set up auto-payments or monthly reminders to keep track of bills. Don’t forget: financial grades (credit scores) will likely be as much or more important after graduation as your GPA.
6. Be thrifty with expenses
Besides tuition, additional college costs such as books, food, housing and other expenses can really add up. The College Board estimates that an average college student spends more than $1,200 per year just on books and supplies alone.
You can’t avoid expenses like books, but you can still look for ways to save. For example, renting textbooks can be a great way to save money. Also, learning to cook can help stretch your dollars, as take-out or eating out can both be expensive.
7. Barter, trade, share and get student discounts
While being thrifty is admirable, knowing how to stretch every dollar and obtain your needs and wants without going broke has its place.
Social media and communications apps often include freecycle or buy/sell/trade groups where you can obtain products or services free, through barter, or at discounted prices. You can also barter directly with others on campus.
It’s also worth looking into student discounts. Here are a few deals for college students:
- Amazon Prime has a six-month free subscription for students, then 50% off the subscription price afterward.
- Hulu Student offers a 75% college discount, and students can get Spotify Premium for only half the price with Hulu/Showtime included.
- Apple offers substantial discounts on their computers and tablets. And if you subscribe to the Apple Music student plan, you also get access to Apple TV+ free.
- There are substantial student discounts for many other products and services, for everything from Amtrak to Adobe Creative Cloud to Ableton Live. You can even save 15% on Amtrak fares.
Good financial decisions now set you up for future success
College can be a daunting time in a lot of ways, particularly when it comes to money. But by playing it smart and avoiding common traps, students can lay a strong foundation for a lifetime of financial success.
Working a good side hustle, establishing credit, building a solid budget, and making every dollar stretch set you up to make ends meet now, but they also build strong habits for the future. Keep these 7 tips in mind and you’ll be well on your way to financial empowerment.
*Loans through Prosper can’t be used for paying for postsecondary educational expenses including but not limited to tuition, fees, required equipment or supplies, or room and board.
Eligibility for personal loans up to $50,000 depends on the information provided by the applicant in the application form. Eligibility for personal loans is not guaranteed and requires that a sufficient number of investors commit funds to your account and that you meet credit and other conditions. Refer to Borrower Registration Agreement for details and all terms and conditions. All personal loans made by WebBank.