Money, money, money. Money makes the world go round. A fool and his money are soon parted. Money doesn’t grow on trees. Whatever the idea may be, there is probably a pithy saying about it that can be connected back to money. But when it comes to the real life of college students, the reality of having dollars and cents can easily get you down. How do you give yourself financial security? Start by learning some personal money management skills early on that can carry you through to a fiscally stable adulthood.
Budgeting for college and beyond
You have to start with a plan. This is essential both when you are in college and for later in life. For college students, begin by sitting down with your parents and establishing what they can and will cover in terms of your college expenses and what part of the tab you will be expected to pick up.
Mary Hiers wrote on August 28, 2013 for Mint.com’s blog, “6 Money Skills Every College Student Should Learn,” advising parents and college students to create a budget together before starting school that lists all of your monthly income and estimates your expenses.
Whether your parents instill money management skills in you or you take the task on yourself, creating a budget and sticking to it is a must. Maybe your parents will cover shortfalls or maybe they won’t, but it’s better to live within your means than find out the hard way that there are two weeks left in the month, you’ve spent all your food money on hanging with friends and mom and dad expect you to figure it out.
Banking, savings and interest
If you haven’t already got a checking account, now’s the time. You may or may not actually need to write checks, but you should at least know how to and have some checks just in case. Most likely you can handle everything with your debit card and pay bills online. But be careful. Some utilities may charge you to make an online payment. Better to be out the price of a stamp than pay a $5 convenience charge to pay through the Internet.
But back to banking, one part of personal money management is to know how banks work. For instance, shop around to find a bank that is not only convenient to your school, but one that has no (or minimal) fees. And if mom and dad deposit a check in your account, know that it is going to take a few days to clear before you can spend against it.
Finally, in an article on Monster.com, “Financial Literacy a Necessity for College Students with Money Questions,” college students and recent graduates are given a “Top 10” list of personal money management skills they will need in life. No. 5? “Save, Save and Save.” The reasoning behind this is that emergencies pop up, but if you have a savings account you won’t be caught off guard and have to reach out to mom and dad or, worse, use a credit card to take care of it.
Speaking of credit cards
According to Nancy Anderson in “Ten Things College Students Waste Money On” written on September 15, 2011, for Forbes, “The average college student graduates with $4,100 in credit card debt.” You can avoid this fate by simply not getting a credit card. That may sound easier said than done, but think about it for a minute. If you have plotted your budget carefully and included in that budget some savings to cover emergencies you should be ok. Not to mention the fact that the $20 you charged to see a movie or buy those flip flops could end up costing you way more if you don’t pay your credit card bill immediately and interest accrues. Do you really want to be still paying for some bad movie when you are 30?
Hiers cites an infographic from Credit Sesame that says 70 percent of undergraduates have a credit card, but only 9.4 percent pay the balance in full every month. Meanwhile 75.7 percent of those college students with credit cards had no idea what their credit card company charged for late payments.
If you still simply must have a credit card, make sure you are educated about it. Personal money management skills are vital when it comes to the world of credit or you may find yourself in serious financial trouble after graduation. Part of being on your own and being a grown up is learning how to handle money. It may not always be easy or fun, but it doesn’t have to be horrible either if you take charge of your finances and are aware of how and where you spend your money. Happy budgeting!
What are some tips you’ve learned about money management? What pitfalls should others avoid with their cash flow? Share your fiscal wisdom in the comments below.