26 Dec 7 Tips for Managing Money for a College Student
7 Tips for Managing Money for a College Student
Have you ever considered that your children are on your “payroll”? Now, hear me out… I’m not saying they are your employees, of course. But by the time your children are ready for college, you shouldn’t be their primary source of income. They should be able to manage their own finances well enough that they aren’t depending on you anymore.
Parents, you can empower your soon-to-be college students and set them up for financial success. In this article, we will discuss seven tips to help college students manage their money.
#1 Budget
Being on a budget while in college may not be the most exciting thing, but it sure will be worth it in the end. While other students are going further and further in debt and begging for money from parents and friends, students who choose to stick to a budget will come out on top. When students budget for expenses that are months away, they feel more prepared and money savvy because they are planning ahead rather than resorting to using credit to pay for expected bills.
And even though budgeting students are limiting their spending, they can still enjoy college life by creatively choosing frugal and free activities. It takes a lot of willpower and discipline not to go out for drinks every night or have the latest and greatest gadgets, but it is possible. A basic budget and emergency fund can help students stay on track and stay out of debt. And paying with cash whenever possible can help reduce spending since it’s harder to part with cash than to use a credit or debit card.
#2 Working While in College
Working while attending college is a no-brainer because there are so many benefits. For example, working college students can sometimes take advantage of employee benefits and tuition reimbursement, thereby lowering the cost of attending school. When you’re earning money, you don’t have to borrow as much, which results in less interest being paid. Some students choose to work full-time while attending school part-time so they can minimize debt. The downside to this, of course, is that it takes a bit longer to get through college, but the financial payoff is huge. Finally, when students work their way through college, it prepares them for the work world after they graduate and could open doors for future employment because of the experience they gain.
#3 Don’t Try to Keep up with the Joneses
Many college students struggle with wanting to have the designer clothes, the newest gadgets, and the best entertainment and fun. They want to keep up with what they see everyone else having and enjoying, but they need to remember that their main job is college, not partying and spending.
Having the mindset of being satisfied with what you have and not needing the latest, greatest, and newest things take maturity. Often, students learn this lesson the hard way. But parents and other trusted adults can try to instill this perspective in their students early and foster this mindset by modeling it themselves.
#4 Look for Internships
Internships can be a great way to gain experience and impress future employers while learning skills in the industry in which the students want to work. It’s a great way to make sure that students are a good match for an industry or corporation before coming on full-time. Some internships are unpaid while others offer some compensation, so this is something that students will need to consider as well.
#5 Refinance Your Student Loans
Understanding basic financial terms and how different loans work can empower students to refinance the terms of their loans so that they end up paying less in the long run. Encourage students to speak with a financial adviser about how they can renegotiate their loan terms and pay off student loan debt more quickly. The bottom line: if students are realistic with their loans from the start and refuse to borrow more than they really need, then they will be in better financial shape.
#6 Use Credit Cards Wisely
Credit cards aren’t all bad, but students need to learn to use them wisely rather than abuse them. Responsible credit card use can help students build credit while in college, which can make it easier to lease an apartment or buy a vehicle later on. Students need to ask themselves whether they’re using their credit card for a “want” or a “need” and have a plan for paying it off in full as soon as possible. They also need to exercise self-control and set parameters for when to use a credit card and when not to.
On the other hand, credit card companies target college students, knowing that they often run up balances before they realize what it really means. It is possible to make it through college without a credit card. And if students are already racking up student loans, they don’t really need credit card debt on top of it. Students need to look at their personal tendencies and be honest about whether they can truly handle a credit card or not. If students choose to get a credit card to help build their credit, they need to use money from their budget to pay off the card at the end of each month so balances don’t get out of hand.
#7 Take Online Classes
By living at home and taking online classes, students can dramatically cut their costs for room and board, which can add upwards of $20,000-45,000 per year! And consider how much students can save in transportation costs through online learning instead of on-campus classes. The savings are astronomical!
There are lots more ways for college students to manage their money, including using their student ID to get discounts, carpooling with friends, and buying used books instead of new. Students can also minimize their meal plan and eat one meal per day in their dorm, forgo having a vehicle on campus, choose an in-state school for best tuition rates, and even consider living at home and attending a nearby community college. With a little creativity and a little willpower, students can get an education while not breaking the bank.
