Mastering Money 101 not only will get you through your college career, it will help you long after graduation.
Follow these lessons, and you’ll ace your own money course.
Lesson 1: Track your expenses and make a budget
“I spent how much?” asks any college student who runs out of money by the weekend.
Avoid that situation in the first place by using a program like Money Talks News partner You Need A Budget (YNAB), which enables you to track your spending by category. You’ll learn quickly that in the absence of home-cooked meals, a couple of pizzas and those Chipotle runs really do add up.
Once see you see where your money really goes, you can use YNAB to make a plan for your money before you spend it. A budget will reduce the risk of money mismanagement going forward.
Lesson 2: Find freebies and bargains
Plenty of deals are out there for college students ― all you have to do is look. Ask at restaurants, museums and concerts whether there’s a student discount.
Computer and electronics companies often offer special deals to college students, too. If you have an Amazon Prime Student membership, take full advantage of the money-saving benefits.
Campuses are rife with free and low-cost entertainment, including concerts, dances, art galleries and comedy shows. Some campuses also offer free or low-cost health clinics or prescription medicines.
For more ideas, check out “15 Ways for College Students to Save Money.”
Lesson 3: Debt is not your friend
Don’t borrow any more than you absolutely have to on student loans. College is expensive, even before you start paying interest on borrowed money.
Tuition and fees for the 2018-19 school year averaged $10,230 at public four-year, in-state institutions, according to the College Board. They averaged $35,830 at private nonprofit four-year schools.
While it’s important to establish credit by getting a credit card, think before you borrow — which is what you’re doing when using plastic. Don’t use a credit card unless you can pay off the bill in full every month or it’s a true emergency (which does not include the urge for late-night pizza or lattes).
Credit card debt can lower your credit score, limiting your chances of obtaining loans or other lines of credit or causing lenders to charge you higher interest rates.
A poor credit score can even cause a landlord to require a larger security deposit, as we detail in “8 Types of Companies That Are Looking at Your Credit Report.”
Lesson 4: Understand your credit score
Your credit score is derived from information in your credit report.
Under federal law, you can get one free copy of your credit report from each of the three major nationwide credit reporting companies — Equifax, Experian and TransUnion — every 12 months. See “How to Get Your Free Credit Report in 6 Easy Steps.”
Many banks and credit card companies and certain other companies will give you your credit score for free as well.
The higher your credit score — which generally ranges from 300 to 850 — the easier it generally is for you to obtain credit, and at better interest rates. Score 579 or lower, which is considered “poor,” and you may be denied credit, says Experian.
To learn more, check out “7 Credit Score Myths: Fact vs. Fiction.”
Lesson 5: Keep an emergency cash stash
Even if it’s just a little bit of money, an emergency fund will give you a cushion when things go wrong — and they will. A cash stash may be all that separates you from debt.
Among the unanticipated situations you may face:
- Delayed financial aid payments: Mistakes occur, and they can hold up the process.
- Auto repairs: If your car breaks down and you rely on it for transportation to school, you’ll need a way to get it back up and running.
- Medical expenses: Unless your insurance coverage comes with a low deductible and small copays, expect to fork over a nice chunk of change if you need medical care.
Need help getting started? Check out “9 Ways to Build an Emergency Fund When Money’s Tight.”
Lesson 6: If money is tight, get a job
If you work a part-time gig while going to school, not only will you make money, you’ll also have less time to spend it, allowing that emergency fund to grow.
If possible, pick up a part-time gig, work-study job or internship in a field that interests you so you can explore it while making a little cash. A low-level job in the accounting department may pay peanuts, but it could enable you to shadow professors or get a feel for the industry.
What tips do you have for college students managing on a budget? Share in comments below or on our Facebook page.