on January 24, 2023
The semester is relatively new, and college students are easing back into their classes and life as usual. With so much on a typical student’s plate—studying, attending classes, extracurriculars, socializing—it can be difficult to focus on finances.
However, many college students would benefit from a little forethought and intentional financial planning. As of September of this year, the average student borrower owed $28,950 in student loan debt. Though students usually won’t have to pay back their loans until after school, just accumulating this debt can feel like an increasingly-heavy load on their shoulders. With so much inevitable debt, does day-to-day spending really matter?
Absolutely.
College is the time when many people start using their first debit or credit card, start making financial decisions on their own, and usually have greater freedom than what they’ve experienced up until that point. That, coupled with the pressure to go out and be social, can be a recipe for financial disaster.
To keep on top of finances and start becoming financially responsible, college students can try any (or all) of the following 5 steps:
1. Set a budget.
Creating a budget doesn’t have to be complicated or time-consuming. It involves listing income sources and then determining how much money should be allocated to different expenses, such as rent, food, and entertainment. Doing this can help keep spending under control and better enable college students to understand how money works and how it can be managed. Additionally, if the student knows they only have $X to spend each week, they can become more prudent with their choices (perhaps opting for a game night instead of going out for entertainment).
2. Start saving.
Building up an emergency fund is an important step college students can take to prepare for the future. Although they may not have much money coming in, it’s a good idea to set a small monthly savings goal (even $10 or $15) to add to an emergency savings fund. You never know when the car will break down or a new $150 text book is needed!
3. Shop around for cheaper alternatives.
Instead of heading to the bookstore for that new textbook, consider alternatives such as renting books or buying them used online. Another great way to save money is to make coffee at home instead of buying it at the on-campus cafeteria or coffee shops.
4. Utilize student discounts.
Many places near campus offer discounts to students. From discounts on transportation to discounted entertainment, students have a wide variety of discounts available to them.
5. Look for free activities.
One way to have fun without spending a lot of money is to search for free events and activities in the area. Most college towns host many free events, such as concerts, improv shows, or art exhibits. There’s usually plenty of free fun to be had!
Planning for financial success in college can be a challenge. However, by starting small and making intentional budgeting decisions, students can take responsibility for their finances and begin a journey toward financial independence.