Being a college student means leaving the safety of your parents’ home and facing responsibilities like money management. From groceries and textbooks to parking and tuition, the costs associated with a college education can add up very quickly. So how do college students manage their money? Is budgeting difficult to learn?
In this article, we’ll provide 6 personal finance tips for college students to help them manage their money more effectively.
1. Create a Budget
Having a monthly budget can help you manage your spending and save for short-term needs (such as textbooks for the upcoming semester), as well as long-term goals. Start by listing your monthly income (including your allowance, scholarships, and financial aid), then list your expenses into categories like education, food, housing, entertainment, etc.
This will allow you to keep track of your spending and determine how much you can spend for the upcoming month or, even better, the whole semester, including groceries, class materials, and visits home.
2. Cook at Home
Did you know that ordering delivery from a restaurant costs nearly five times more than cooking a meal from scratch? Using a meal kit service is a bit more affordable, but still about three times more expensive than cooking at home.
So, if eating out or ordering delivery has become a habit, consider cutting back a little. Cooking at home is not only healthier and more affordable, but it can also be fun. Although it is true that home-cooked meals require planning ahead, you’ll be able to save lots of money by buying ingredients from the supermarket and repurposing leftovers.
3. Buy Used Textbooks
The campus bookstore might be convenient but it may not be the place to get the best deals on textbooks. Studies have shown that an average full-time, on-campus undergraduate student spends $1,240 on supplies and books.
Luckily, there are ways to save on textbooks. For instance, you could consider renting or buying used books from sites like Amazon and eBay, where textbooks can cost half the price of those at the campus bookstore. You can also visit the library, share books with your classmates, or even buy electronic versions of the books which are likely to be much cheaper.
4. Earn Extra Money
Think about whether it is possible for you to work without hindering your studies. Even a part-time job can be great to earn some extra money that you can use to pay off your student loan interest and stay afloat with payments like tuition, housing, food, and transportation.
Currently, the majority of student salaries range from $2,292 to $3,875 across the US. Some of the most popular jobs for college students include animal caretaker, barista, brand ambassador, call center representative, nanny, etc. You should also consider freelancing work, depending on what you are majoring in.
5. Pay in Cash Whenever Possible
Paying with cash instead of using your credit or debit card can be a great way to save. Why? Because research has shown that physically handing over your money and watching it disappear can be painful. Swiping a card, on the other hand, is too simple and it is easy to forget that it equates to real money.
So, if your goal is to save money, consider ditching your cards and start paying in cash. Once you get your paycheck and allocate money for bills, tuition, and other payments, simply withdraw a predetermined amount of cash for the month or week and make sure to spend only that amount.
6. Automate Your Savings
When it comes to spending less and saving more, most financial experts will recommend automating your savings. This means setting up a regular, automatic transfer from your bank account to a dedicated savings account. Most banks have a link on their sites to help you set this up, so it should be quite fast and easy.
However, since automated savings can be difficult to achieve for students living on stipends, you could also consider manual money movement where you regularly review your account balance and then decide how much you can move into savings.
While starting college can be very exciting, it can also be quite nerve-racking. Being away from home means being independent and responsible in all aspects of your life, including finance. The good news is that by following the tips provided in this article, you can easily learn how to be mindful with your sending and make sure you have enough money to go through the month without stressing too much.