Smart Money Practices for College Students

The first smart money step you’ve taken is going to college in the first place. College graduates tend to earn more over a lifetime than people who do not go to college. Now, let’s look at ways you can take other good financial steps in college to set yourself up for a lifetime of the right money habits.

Borrow Responsibly

There’s a good chance that even your savings, federal aid and any scholarship money will still only cover a portion of your tuition. You can also take out student loans from a private lender that you’ll repay after you graduate. Shop around and find a loan that gives you an interest rate and a payment plan that you are happy with.

Watch Your Credit Card Balance

Don’t carry a balance on your credit card unless you’ve had to use it in an emergency and reduce the likelihood of needing it in an emergency by having a savings fund with at least a few hundred dollars in it. A credit card is not necessarily a bad thing, but you need to have the discipline to only put as much on it as you can pay off each month. By doing this, you can accumulate rewards, such as cash or points toward travel.

The reason it’s so important not to carry a balance is that credit cards have high interest rates that can mean you end up paying far more for an item than its original price. In addition, those high rates can also mean it is easy to get into debt and start struggling to make even your minimum payments. When you graduate from college, you want your total focus to be on clearing your student loan debt, not on trying to pay off a credit card.

Work During School

In addition to working during the summer, you should also try to work part time during the school year. This can add some challenges to your schedule, but the extra cash will be helpful even if you are only working 10 or so hours per week. On top of that, a job can also offer you valuable experience that can help you when you’re looking for career-type work after you graduate. If you just can’t commit to a part-time job, consider gig work that you could do whenever you have some free time.

Make a Budget

It’s not much fun but creating a budget will help you manage your money better. A budget can actually reduce any stress you have around spending because you will know exactly how much money you are allowed for entertainment, shopping and other categories. You won’t have to fret about whether you can afford takeout this week because you’ll know. In fact, there are even apps that can warn you if you are about to go over budget. When you make the budget, you probably won’t know exactly how much you’ll spend on various things, so give it your best estimate. Then, track your spending for a few months, and make adjustments as needed.