College is also synonymous with young people
assuming a greater responsibility for managing their own money – away from the
reliable security of mom and dad's wallet.
These six easy tips will help college
students make the grade when it comes to forming a strong foundation for money
management.
1. Create a
budget. This is
incredibly important. List monthly income sources, including savings, wages and
parental allowances, and then write down estimated expenses for the month. It
isn't easy to identify college living expenses in advance, but you should try.
Take costs such as school supplies, food outside your meal plan, personal care
items and laundry into account. Then, try managing your budget and tracking
expenses using an online personal finance management tool like Mint.com, which
helps you easily create and stick to a budget.
2. Separate
wants from needs. Is RM50
per week for gas a "need" or a "want?" How much should you
budget for non-meal plan food? How much will laundry cost? After a few months
on campus and tracking expenses, it becomes easier to distinguish wants from
needs and put a plan into action. Some students give themselves a weekly cash
allowance rather than carry a debit card, and when that week's allowance is
gone, they wait until next week for more "wants."
3. Set up a
checking account. Banks
usually cater to college students by offering free checking and saving
accounts, which allows students to avoid fees on withdrawals or fund transfers.
Shop around to find a bank with convenient ATMs near campus to eliminate
out-of-network charges. And keep in mind that when an out-of-state check
arrives (say, from grandma), it may take a few days to clear, so keep an eye on
the account balance before spending against it.
4. Use,
don't abuse, credit cards. In 2012, 70
percent of undergraduate students had at least one credit card, according to
the International Journal of Business and Social Science. College is a great
time to start building credit (which is crucial for leasing an apartment,
purchasing a vehicle and even landing a job post-graduation), but it's easy for
many to amass a large amount of debt while in school. It's important to
understand the difference between credit building and overextending. If you
don't know, visit a business professor during office hours and ask!
5. Do your
homework on loans and financial aid. College
graduates tend to have a difficult time balancing ever-growing student loan
payments against declining wages. Understand what the exact size of your
student loan debt will be upon graduation, and come up with a plan for how you
will pay it back. Even if it involves moving back home for a bit (to preserve
your sanity, give yourself a specific timeline for when you plan on moving
out), it will be worth it in the end.
These six easy tips will help college
students make the grade when it comes to forming a strong foundation for money
management.
