10 Incredible Advice On Managing Personal Finance For College Students

Let's start by quickly applauding those of you who've made it to college and are ready to take on the new challenges. One such challenge would be managing your personal finance. Now, the general perception among students regarding college education is that you pursue it to land better work opportunities in the future. But, rarely anyone thinks about this crucial aspect that could play a huge role in shaping their future financially.

Agreed that the thought of monitoring your personal finances could be a tad bit intimidating, but this could prove to be beneficial in more ways than one. So in order to simplify this process of managing your finances, you can use these handy tips to ensure your financial stability in the future.

1. Learn to create a budget for everything

It’s quite convenient to think that bills are the only expenses that will be included in your monthly budget. Well, hate to break to you, but this is where you’re wrong. Those quick runs to your nearest coffee places count as well.

While in college, specifically if you are studying abroad, the biggest thing to learn is managing your finance and creating a budget. This means you have to allocate funds every month towards going to the movies, buying books and supplies, eating out, late-night snacks, socializing, etc. Ultimately, you should always remember that the budget you create should allow you to save a portion of money every month, so make sure to stick to your budget at any cost.

2. Find a part-time job

While going to college full-time is tedious, most students get some free time every week, which they can easily use to devote at a part-time job. Even putting in 9 hours every week at work could culminate into a considerable amount of extra money every year, which would further be useful for settling debts or to begin saving.

Other than the monetary aspect, working while you’re in college is an excellent way to develop skills that employers generally look for after graduation. Ideally, you can learn business communication, crisis management and problem-solving skills by having a job while pursuing a college degree. These skills enable you to prosper in your career after graduation.

3. Never forget to pay your bills on time

It’s not uncommon for students to shell extra money on penalties and late fees. In this case, using online payment tools and other payment services makes it hassle-free for the students to pay their bills on time.

Also, paying your bills after the due date has passed is the most usual reason college students have poor credit scores. If you wish to get a good interest rate on loan, or even be able to rent a decent apartment, you need to maintain a great credit score.

4. Don’t use credit cards, pay in cash instead

Since most students don’t have much income or savings, using a credit card is the only option in such cases. But while they are essential in many cases, the use of credit cards should be restricted for emergency purposes and should always be repaid every month. If you plan on using a credit card, then you have to exercise caution.

Swiping your credit card at a cash register is fairly simple, and sometimes this simplicity proves to be banal. It’s quite easy for people to forget that it’s equivalent to actual money. Once you receive your paycheck from the part-time jobs and divide the resources between tuition fees, bills and other monthly expenses, make it a point to use only cash for other aspects of your budget.

Providing a crisp twenty-dollar bill to the grocery store attendant might feel different to you as compared to making payments via plastic, but it will surely assist you to avoid over-expenditure.

5. Start saving money, even when you can’t contribute enough

The most crucial thing students should consider doing while they’re in college is opening a savings account and maintain it regularly, even if it's only a meagre amount. This will enable you to rake in the joys of compound interest.

The earlier you start the process, the longer your savings have to multiply, and if you start saving at 18, you'll be light years ahead of your contemporaries who are not likely to open a savings account at least till the time of getting their first full-time job. While saving for your future is possibly the last things you want to focus on, but getting into the habit early will allow you to succeed later in life.

6. Learn all about credit score and why it’s vital

At this point in your life, you are probably least bothered about a credit rating is, and why you shouldn’t have a low score. In case of managing your personal finance, the best thing you can learn as a student is how to build your credit by indulging in activities like, having a credit card and making consistent payments.

Also, you would want to avoid any black marks on your credit rating, which happens when you are not consistent with your bill payments. Again, at this juncture, you might not be so eager to know about credit scores let alone maintaining it. However, you’ll notice that it will matter when you apply for additional credit cards, car loans, and mortgages in the future. A low score means you'll be required to co-sign with your parents, or your application will be rejected.

7. Educate yourself

Sadly, many of us didn’t know about the basics of financial literacy at an early stage of life, which is unfortunate considering it's essential for every student to understand and maintain.

Just because you didn’t learn this crucial thing in school doesn't mean you should be ignorant about it. So you can find various blogs on personal finance, or read a book like The Psychology of Investing by John Nofsinger, which is not only known for providing financial homework help but is useful for every student to gain some valuable insights into managing personal finance. Now ultimately the responsibility is on you to be meticulous with your finances, so you better start learning these things now.

8. Understand you aren’t going to be rich overnight after you graduate

A common misconception that many of us had as a child is that adults are rich. Then as you grow up, you begin to realize having a full-time salary doesn’t mean you'll be picking up the drinks tab with your friends and buying fancy clothes all the time.

Harbouring unrealistic expectations in case of your finances is wrong. Most of the time, the starting salary of a student, when he/she is right out of college or university tends to be pretty modest. So naturally more than half of it will be used up to pay rents and bills. Being an adult means you have to take care of more responsibilities and expenses when you get out of college.

9. Purchase used textbooks & sell your old ones

When you are studying in college, you will be required to buy scores of textbooks. However, most of these textbooks won’t be available at an affordable price, and that's why it may not be wise to buy new books at the start of every semester.

So as an alternative, you can search online for used books, or check out bookstores in and around your locality which hold loads of used textbooks for much less expense. Another super convenient and money-saving tactic would be to look for the eBook versions of your textbooks that have been recommended by your university.

10. Eat at home

More often a significant part of a student's monetary resources is exhausted by dining out with friends. While it can be a simple birthday treat, but chances are it will end up being a very expensive affair.

So the only worthy alternative to this would be to cook at home and eat, this way you’ll also save a lot of money and have fun with your friends as well. Cooking is also an essential skill to acquire which will be useful for life. 

Now don’t think cooking at home means imposing a complete ban on eating outside. But if grabbing a salad from the local diner or swinging by a coffee place after dinner has become a habit, then you need to cut back on it.

Moreover, cooking at home can be turned into a fun activity as you can even involve your friends in it. While it may need some planning and preparations, but it will save your monetary resources considerably as you can get the necessary ingredients from your local supermarket or you can also make use of the leftovers.

Parting thoughts,

Most college students rarely spend the time reflecting on how the choices they make will influence their financial stability in future. But, the fact is, in the case of your personal finances, it's always better that you start early, instead of regretting later.

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