College living is an exciting and challenging undertaking for most students. Moving away from mom and dad, living on your own and making decisions for yourself and having to manage your own finances are just a few of the roadblocks you will be facing. Having a plan in place beforehand and sticking to that plan as closely as possible can help to ensure that you survive the transition with the least stress possible.
Expenses and Budgeting
One of the first and most important steps for successfully managing money as a college student is to truly understand your expenses. It is likely that you have never had to budget your own money if you’ve lived with your parents your whole life, so it can come as quite a shock the first time you’re faced with that harsh reality. Create a budget by making a list of your fixed expenses, such as rent, tuition, books, car payments, utilities and food. Next, make a list of your discretionary expenses such as clothing and entertainment. Until you know what your monthly expenditures are, you will not be able to make a realistic budget to work with.
Learn to live within your means. Expensive electronics, going out with your friends and eating out multiple times a week are likely going to become a thing of the past. Make sure that you are meeting your financial obligations before you start to spend on frivolous items that aren’t necessary for your survival. Remember, college is probably going to be a time of your life when you make very little money, so you had better be prepared to make some sacrifices. Try to avoid accumulating debt whenever possible, as it can quickly become overwhelming and will likely follow you for years beyond college. Keep a single credit card on hand for emergencies, but do not use it for anything that isn’t absolutely necessary.
Preparing for the Future
Save whenever you can and as much as you can. Even if it is a small amount, putting a little bit away with each paycheck will begin to accumulate over time and provide you with a much needed cushion if you’re put in a position where you need it. The earlier in your life you begin to save, the better off you will be, both in terms of having money saved for the big expenses in life to retirement. Don’t fall into the trap of thinking you can just wait until you graduate and get your dream job before taking your finances seriously. Life doesn’t always work out as planned and time is your greatest asset when it comes to saving money. Even if it doesn’t seem like the twenty bucks a week you’re saving in college is a lot, you will thank yourself after graduation.
Managing real life expenses and trying to save for your long-term financial goals are difficult tasks for most people, not just college students. Establishing yourself as a responsible adult at a young age will help to lay the foundation for a secure financial future.