College is about more than just getting a degree. For many new college students, starting this phase of education is also a time to learn any number of important life skills, from proper laundry care to time management.
However, many college students often overlook one important life skill: money management. As a college student, you might assume that money management isn’t important, since you’ve got so little money to manage.
Unfortunately, neglecting your money skills in college could have lasting negative repercussions throughout your adult life. Rather than assuming you’ll sort out the money stuff “later,” get off on the right financial foot by following these money moves when you start your college career.
1. Open a student checking account
Your brand-new university ID makes you eligible for student checking accounts. This gives you a good home for your money while you’re in school, and helps you develop good banking habits.
Student checking accounts often have low or no minimum opening deposits, and they also generally do not require you to carry a minimum balance each month. In addition, some student accounts offer perks like a limited number of free out-of-network ATM transactions per month, free checks, and some overdraft forgiveness.
2. Start automating your bills
Once you have a checking account in place, you can take advantage of your bank’s online bill paying services to set up automatic payments of your regular expenses. Automatic bill payment allows you to keep your focus on your studies, where it belongs.
Of course, the caveat is that you need to periodically make sure your account has enough money to cover your automatically paid bills. One good way to do this is to set up a weekly reminder to check your finances. This will help you establish the habit of keeping an eye on your finances even as they are taken care of automatically.
3. Create a spending plan for your financial aid
Receiving a big chunk of money from your university’s financial aid office can be pretty exciting — whether you’re receiving loans you’ll have to pay back, or grants that you won’t. It’s tempting to live it up when you receive your financial aid, but that’s a good way to run out of money before the semester is over.
Instead, take the time to create a spending plan for your financial aid disbursement before the money hits your bank account. Determine how much of your financial aid will need to go toward tuition, textbooks, lab fees, and living expenses. Having such a plan in place will help you keep your spending in check when you feel the urge to splurge some of your aid money.
5. Keep track of your student loans
Many college students — including yours truly! — make the mistake of paying no attention to their student loans until they have graduated. In general, the amount of money you are borrowing can seem unreal, so it’s very easy to just ignore the problem until you reach your student loan exit interview just before graduation.
However, knowing early how much you owe and how much it will cost you to pay it off is both good for your financial health and can help you remain motivated in your studies. It’s much easier to get up for that 8 a.m. chemistry lab when you understand just how much you’re paying for the privilege of going to it.
If you have federal student loans, you can keep track of how much you have borrowed and what your repayment options will be through the National Student Loan Data System. Just select “Financial Aid Review,” log in, and you can view all of your federal student loans in one place. If you have any private student loans, you will need to contact your lender for information regarding your loans.
6. Build up an emergency fund
When I was in college, a classmate’s financial aid package was re-evaluated at the end of her first year. The school’s financial aid office decided that she could count on an additional $1,500 from her family for her second year, even though she knew that it would be impossible to ask for that additional money. By working some serious overtime that summer and living off tuna fish and ramen, my classmate was able to scrape together the additional money. But this situation could have potentially meant the difference between her returning to school and her dropping out.
An emergency fund can make this kind of unanticipated financial change much less stressful than it was for my classmate, especially when you are already living on a shoestring.
Building an emergency fund might feel impossible when you’re in college, but don’t forget that small amounts can add up to something really helpful. Start with an automatic transfer of $5 —$10 per week into a savings account. Add in whatever excess money you come across — including the cash you get for selling back textbooks or some of the birthday money Nana sends every year.
Though your fund will grow slowly, working steadily on it will ensure that a financial aid (or other emergency) does not jeopardize your education.
7. Learn from your financial fumbles
Every time you make a financial decision as a college student, you have the opportunity to learn from your choices. The trick to learning from financial mistakes rather than repeating them, is to look back on the choices you made with curiosity and compassion for yourself. You’re a college student, after all, and learning is the entire job description.
Take each moment of money regret as an opportunity to figure out where your financial weaknesses are. You’ll finish college with a much better understand of yourself and your money temptations, as well as potential solutions for avoiding those temptations.
Learn about finances before you enter the real world
It may feel like adding financial responsibility on top of your educational requirements will be too much to handle, but college is actually a great time to work on your money management skills. Taking good care of your finances as you are engaging in higher learning sets you up for financial success after graduation.